-Prestige Class purchased a 7,936-square-foot office-retail building at 5209 Wilshire Blvd. from 5209 Wilshire for $3.5 million, or $447 a square foot.
-A parking lot and 22,000-square-foot office building at 1115-27 Crenshaw Blvd. in Wilshire Center sold for $7.5 million.
-Film production company Mandalay Pictures renewed for 18,696 square feet at CMD Realty Investment Fund’s building at 4751 Wilshire in Wilshire Center.
-Visual effects company Third Floor leased 18,686 square feet in a 10-year deal at Wilshire Courtyard, 5410 Wilshire.
People were abuzz about upgrades at both ends of the Wilshire Corridor in the third quarter.
Let’s start at the eastern terminus, where average asking rates rose sharply. According to data from Jones Lang LaSalle Inc., landlords boosted average asking rents to $1.97 a square foot in the quarter, a 14-cent increase from the $1.83 in the second quarter. Vacancy remained steady around 19 percent.
“Jamison Services has raised their rents in the 3000 block to an average of $1.90 per square foot,” noted Chris Runyen, senior managing director at Charles Dunn Co. Inc. in downtown Los Angeles. “We’ve seen small bumps for random buildings in the past, but this affects all of their buildings and the increase is significant. Since they’re beginning to convert a number of office buildings to apartments, increasing demand and decreasing supply is allowing them to ask for and get significantly higher rents.”
Another factor in the rent increase is code compliance issues, according to Joel Frank, senior vice president of CBRE Group Inc. in Century City.
“Within the Park Mile and Wilshire Center, the rents don’t justify the costs, yet the costs are essential in order to meet code,” he said.
Increasing rents prompted some companies to renew leases early for more favorable terms. For example, Mandalay Pictures renewed for 18,696 square feet at CMD Realty Investment Fund’s building at 4751 Wilshire Blvd.
At the western end of the thoroughfare, upgrade talk was focused on infrastructure, Frank noted.
“Money is being invested in the area, parking lots being bought or entitled, (plus) the reality of the Purple Line coming soon and its economic impact is becoming a bigger story every day,” he said.
Miracle Mile’s average asking rates have bounced around this year from $3.24 a square foot in the opening quarter to $3.82 at midyear and down to $3.71 to close the third. Vacancy held steady around 13 percent over the same period.
Park Mile’s metrics remain essentially unchanged on the year, with vacancy around 20 percent and asking rents holding steady at $2.30 per square foot.
Wilshire Corridor’s fundamentals – including its proximity to the hot downtown, Beverly Hills and Hollywood submarkets – continues to draw investors’ attention.
Among the notable deals were the $7.5 million sale of a parking lot and 22,000-square-foot office building at 1115-27 Crenshaw Blvd. in Wilshire Center and Prestige Class’ purchase of 5209 Wilshire, a 7,936-square-foot office-retail building, for $3.5 million, or $447 a square foot.
“The market is competitive among landlords trying to fill their vacant space, so concessions like free rent and tenant improvements are still common,” Runyen explained. He, like other brokers, said he expects to see rent and sales prices rise through the foreseeable future.
“Some feel like it’s a bubble,” he said, “but these three submarkets still provide quality office space with good parking at reasonable rates compared to other nearby markets.”
– Margot Carmichael Lester
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