RETAIL REBIRTH

The pandemic accelerated a massive transformation in the retail industry, but at least in some areas of Los Angeles, there’s reason to believe brick-and-mortar businesses can continue to thrive. The Business Journal looks at Beverly Hills and Santa Monica, two markets taking different paths to success.

Downtown

Downtown’s second-quarter office vacancy rate rose to 19.3%, up from 18.8% the previous quarter and 16.9% the previous year. There was 116,000 square feet of office product under construction during the quarter and negative 191,710 square feet of space absorbed in the market. Asking rents were down 1 cent year over year and 3 cents quarter over quarter to $3.83 a square foot.
Atlas Capital Group submitted plans for the $650 million 8th and Alameda Studios, a project to redevelop the Los Angeles Times downtown printing plant into an 832,190-square-foot creative campus with 17 soundstages.
 San Francisco-based SteelWave purchased the 150,451-square-foot Switchyard, a creative office building at 500 and 540 S. Santa Fe Ave. in the Arts District, from Pico Rivera-based CEG Construction for $80 million.
 Engineering firm Syska Hennessy Group signed a lease for 14,000 square feet of office space at Coretrust Capital Partners’ FourFortyFour South Flower Street in downtown that will serve as the company’s West Coast headquarters.
 New York-based Silverstein Properties announced plans for a $60 million upgrade to the iconic U.S. Bank Tower.

Hollywood

Hollywood’s office vacancy rate rose to 30.1%, up from 29.1% the previous quarter. The vacancy rate also rose 11.1% over the previous year. Rents decreased to $5.40 a square foot, down 3 cents over the previous quarter and 6 cents over the previous year. Net absorption was negative 31,432 square feet, and 358,813 square feet was under construction during the quarter.
West Hollywood-based Bardas Investment Group and Bain Capital Real Estate, the real estate investment group of Bain Capital, have submitted plans to develop a $450 million project at 5601 Santa Monica Blvd. in Hollywood. The development, dubbed Echelon Studios, was formerly a Sears store.
 Coda Equities purchased the 75-unit Franklin Park Apartments at 6615 Franklin Ave. in Hollywood for $22 million.
 West Hollywood-based Elk Development and Missouri-based Sixty West received $41.1 million in financing for a micro-unit multifamily and retail project in Hollywood.

Westside

The Westside office vacancy rate increased to 16%, up from 14.2% the previous quarter and 9.4% the previous year. Marina del Rey had the highest vacancy rate at 35%; Century City had the lowest at 9.3%. Asking rates for Class A space on the Westside was $5.68 a square foot, up 5 cents from the previous quarter and 21 cents from the previous year. There was 3 million square feet of office space under construction, including 1.2 million in Culver City and 1.8 million in West L.A. The Westside had 955,773 square feet of negative net absorption.  
 Westwood-based Stockdale Capital Partners purchased the 175-room JW Marriott Santa Monica Le Merigot hotel at 1740 Ocean Ave. in Santa Monica from Columbia Sussex Corp. for an undisclosed sum.
 Art gallery Hauser & Wirth signed a 10-year lease for a 10,800-square-foot building at 8980 Santa Monica Blvd. in West Hollywood with landlord Will Enterprises Inc.
 Corcoran Global Living, a residential brokerage affiliate of Corcoran Group, has signed a lease for 5,000 square feet at 9647 Brighton Way in Beverly Hills.
 FabFitFun Inc. signed a multiyear agreement for a 55,000-square-foot headquarters space at the WeWork Cos. Inc. location in the Pacific Design Center at 8687 Melrose Ave. in West Hollywood.

Santa Clarita Valley

Santa Clarita Valley’s office vacancy rose to 20.6%, up from 18.7% the previous quarter and 13.3% the previous year. Net absorption was negative 40,900 square feet, and there was no new office product under construction. Asking rents rose 1 cent quarter over quarter and 2 cents year over year to $2.83 a square foot.
 A development site at 28541 Witherspoon Parkway in the Valencia Commerce Center sold for $9.5 million. It is 5.5 acres.
 Pelican BioThermal signed a lease for more than 54,000 square feet at 28308 Industry Drive in Valencia.


San Fernando Valley

The San Fernando Valley’s office vacancy rate rose to 18%, up from 17.1% the previous quarter. Rents increased 1 cent quarter over quarter but decreased 6 cents year over year at $2.96 a square foot. Net absorption was negative 130,809 square feet, and 309,673 square feet was under construction.
 Quixote Studios signed a 123,974-square-foot lease for an industrial building at 12154 Montague St. in Pacoima. The property is owned by Brentwood-based Rexford Industrial Realty Inc.
 A seven-story affordable housing complex from developer WPH Holdings, based in downtown, at 8011-8027 N. Vineland Ave. is planned for Sun Valley..
 Downtown-based Rising Realty Partners sold a 225,000-square-foot office campus dubbed the Park Calabasas for $79 million to Gemdale USA.

Tri-Cities

Second-quarter office vacancies increased in the Tri-Cities submarket of Burbank, Glendale and Pasadena to 14.9%, up from 14.4% the previous quarter and 11.9% the previous year. Negative 89,498 square feet was absorbed in the quarter, while more than 1.3 million square feet were under construction. Rents increased 6 cents quarter over quarter and 5 cents year over year to $3.64 a square foot.
 Pendulum Property Partners purchased The Link, a 124,785-square-foot office building in Burbank for $61.5 million.
 Waterford Property Co. and the California Statewide Communities Development Authority purchased a 507-unit multifamily community dubbed the Altana at 633 N. Central Ave. in Glendale for $300 million.

Wilshire Corridor

Wilshire Corridor’s second-quarter office vacancy rate rose to 26.5%, up from 23.6% the previous quarter and 21.5% the previous year. Negative 289,987 square feet was absorbed into the market, and no new office product was under construction. Asking rents fell to $2.78 a square foot, down 13 cents over the previous quarter and 5 cents over the previous year. Asking rents in Miracle Mile were much higher at $4.47 a square foot.
 Staples Inc. signed a roughly 19,450-square-foot lease for a former Office Depot location at 5665 Wilshire Blvd. in Miracle Mile.
 An affiliate of Green Cities Co. purchased a 61-unit multifamily building at 1333 S. Orange Grove Ave. known as the Estelle in Mid-Wilshire for $55 million from Canfield Development Inc.

South Bay

South Bay’s industrial market vacancy decreased to 1.3%, down from 2.2% the previous quarter and 3% the previous year. Roughly 1.6 million square feet was under construction, while 5.1 million square feet sold or leased during the quarter. Rents rose to $1.07 a square foot, up 3 cents over the previous year.
 Staley Point Capital and Bain Capital’s Bain Capital Real Estate purchased a 135,000-square-foot industrial property at 2700 California St. in Torrance for $34.5 million from Edelbrock.
 Serverfarm and NantWorks purchased a 117,500-square-foot data center at 444 N. Nash St. in El Segundo for $71 million from T5 Data Centers.
 Brentwood-based Rexford Industrial Realty Inc. acquired five industrial properties for a total of $68.1 million.


San Gabriel Valley

The San Gabriel Valley’s second-quarter industrial vacancy rate decreased to 1.4% from 2.3% the previous quarter and 3.6% the previous year. Asking rents were $0.88 a square foot, up 2 cents over the previous quarter. About 2 million square feet was sold or leased during the quarter and 1 million square feet was under construction.
 Opportunity Housing Group Inc., acting as property administrator with the California Statewide Communities Development Authority, purchased the 261-unit Moda at Monrovia Station at 228 W. Pomona Ave. in Monrovia for $100 million.
 MBK Rental Living and R.D. Olson Construction broke ground on the 344-unit Esperanza at Duarte Station in Duarte.

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