-Three prime properties traded in Santa Monica. A 316,000-square-foot property at 2600-2800 Colorado Ave. was purchased by Invesco Real Estate from Centurion Real Estate Partners/Jeff Worthe for $284 million, or $898.73 a square foot. Joss Realty Partners acquired 1315 Lincoln Blvd. from Lincoln Property Co. for $23.6 million, or $1,003.95 a square foot. And Tishman Speyer bought 520 Broadway for $91.6 million, or $810 a square foot, from Vornado Realty.
-Hulu inked a five-year, 61,000-square-foot expansion lease at Equity Office Properties’ 2450 Broadway in Santa Monica for an estimated $15 million.
-Morgan Stanley renewed and expanded for 30,000 square feet in a 10-year deal at 19060 Wilshire Blvd. in Santa Monica for an estimated lease value of $15 million.
-Law firm Hogan Lovells US signed a 41,685-square-foot lease at 1999 Avenue of the Stars in Century City for undisclosed terms.
-Hudson Pacific Properties leased 40,000 square feet in a seven-year expansion renewal at 11601 Wilshire Blvd. in West Los Angeles for an estimated $13 million.
-The U.S. General Services Administration renewed at 12121 Wilshire Blvd. in West Los Angeles in a deal valued at $10 million.
Westside landlords continued to lick their chops in the second quarter as demand for office space outstripped supply for another quarter.
The vacancy rate diminished further, reaching 13.5 percent in the quarter, down more than a point from a year ago. The tightened submarket sent rents even higher, clocking in at an average of $4.28 a square foot, up 26 cents year to year.
“The Westside is approaching prerecession rental rates in (some) areas,” said Richard Ratner, senior vice president for CBRE.
Leading the way on rents were Beverly Hills at $5.08 a foot and Santa Monica at $5.02, according to data from Jones Lang LaSalle Inc.
“Beverly Hills has surpassed its previous market peak, reached back in 2009,” said Mike McRoskey, a JLL managing director. “There is an expectation that these rental rates will continue to climb through the year.”
Santa Monica has a ways to go before reaching its 2008 peak, however.
“Rental rates in excess of $5 aren’t new to Santa Monica,” noted Neil Resnick, a principal with Avison Young, “especially as it relates to the buildings with an ocean view, which would be 100 Wilshire, 1299 Ocean Ave., 233 Wilshire, to name a few. The 100 Wilshire building has had record-setting asking rates in the past and even during the more challenging economic times their rental rates did not dip.”
The most marked increase was in Brentwood, where the average asking rate skyrocketed 40 cents to $4.02 in the second quarter.
“A number of landlords pushed rates this quarter to keep up with market increases,” McRoskey explained.
Though ocean views never go out of style, demand is particularly high for the low-rise, campus-style spaces especially popular with tech companies and other entrepreneurial ventures, according to Steve Kolsky, executive vice president and managing director with Newmark Grubb Knight Frank.
“There are still a handful of creative options out there as well as some new product under construction,” he said. “However, we do not anticipate there being enough to meet the demand, as this product type is hard to replicate, expensive to build and typically does not make best use of a property’s floor-area-ratio development potential.”
Brokers are bullish on the Westside’s performance thus far. Looking forward, Blake Mirkin, an executive vice president with CBRE, said he expects “steady, reliable and consistent growth, (and) the continuance of rental increases in positive absorption in 90 percent of West L.A.”
– Margot Carmichael Lester
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