By JOYZELLE DAVIS
Making an impression in this town isn’t cheap.
Sure, there’s plenty of low-rent space available. But rents in the most exclusive office buildings as defined by the 10 most expensive lease rates in L.A. County start at $2.75 a square foot monthly.
Space in the county’s costliest building the 100 Wilshire Building in Santa Monica runs a princely $4.25 a square foot monthly. That works out to $765,000 per year for a typical 15,000-square-foot office suite.
But even at that price, you probably can’t get space in the 17-story tower, with its sweeping views of the Santa Monica Bay. Currently, only 2,500 square feet is available, said Eric Olofson, vice president at Cushman Realty Corp., which handles leasing for the building.
“When space does become available, the demand from other tenants in the building usually fills it before we have the chance to actively market it,” Olofson said.
Most of L.A. County’s office space is priced more affordably an average of $1.42 per square foot last year, according to data from Cushman & Wakefield Inc., or $268,000 annually for 15,000 square feet.
To get a closer look at the high-end market, the Business Journal asked Cushman & Wakefield to compile a list of the 10 most expensive office buildings in the county.
Not surprisingly, all of the buildings are in the tight Westside office market. Vacancy rates at the end of last year there were 11 percent, compared with 20 percent in the entire county.
The No. 2 and No. 3 costliest buildings are both in Century City the SunAmerica Center with rents of $3.75 a square foot monthly, and Fox Plaza, with a range of $3.60 to $3.75.
Just a year ago, that same space was going for about $2.50 to $2.75 per square foot. But as the market tightened by mid-summer, landlords at Fox Plaza and the SunAmerica Center began asking for $3 per square foot. The rest of the landlords in the Westside’s premium office market soon followed, and rents have risen almost monthly ever since.
“In the third and fourth quarter last year, we were pushing the $3 figure but not figuring that we’d get it,” said Lisa St. John, senior vice president at Tooley & Co. “Now we won’t do deals for anything less.”
What kind of tenants are willing to plunk down that kind of dough?
“Obviously, people who have money,” said Gary Weiss, senior managing director at the commercial brokerage firm Julien J. Studley Inc., who represents a number of tenants interested in leasing on the Westside. “They want to make a statement with their space.”
Many of Weiss’ clients balk at paying more than $3 per square foot each month in rent, he said. But for a select few, price is no object: “They want to be in that building because they need to put their image first.”
The tenant roster at 100 Wilshire Building, like all of the buildings on the list, brims with financial service companies and prestigious law firms companies with high net worth that need to impress clients and potential employees.
Like 100 Wilshire, the vacancy rate in the 38-story SunAmerica Center is almost non-existent at 0.9 percent. Located at the corner of Avenue of the Stars and Constellation Boulevard, it’s named for SunAmerica Inc., the financial services company that moved in five years ago.
The most recent lease was signed at $3.70 per square foot, according to Mark McCaslin, leasing agent for the building’s owner, Chicago-based JMB Realty Co. But he noted that all leases have a 4 percent automatic annual rate increase so the rate averages out at $4 per square foot over the span of the lease.
Even sublease space at the building doesn’t go for much of a discount, McCaslin said, noting that deals at $2.50 to $3 per square foot are typical.
St. John, who handles leasing for the Water Garden buildings in Santa Monica (which just missed making the top 10), said she often sees “sticker shock” among tenants when she quotes rental rates in the $3 per square foot range.
Most of those tenants, she said, are located in downtown or other less expensive markets and are considering a move to the Westside.
“We’re not out of line with the Santa Monica market and most tenants are aware of that,” St. John said.
Almost all of the buildings on the list were built after the mid-’80s, with the exception of 9701 Wilshire Blvd. in Beverly Hills and the First Federal Square building in Santa Monica. Both of those offices have large blocks of space coming available soon in their choice submarkets, making it a landlord’s market.
The 9701 Wilshire Blvd. building will have three floors available this year, as well as signage rights on the 12-story office, according to Tracy Rasmussen, first vice president at CB Commercial Real Estate Group Inc.
The other Beverly Hills building, Maple Plaza, is somewhat of an anomaly on the list. The lowrise building is nestled in a residential neighborhood, and attracts entertainment companies that want to be away from the more corporate feel of the Westside.
The list was based on direct weighted average rent, meaning that the rent is averaged according to the amount of available space in a building. For example, a building could have 10,000 square feet available at $2 per square foot and another 10,000-square-foot block going for $3 per square foot, creating a weighted average rent of $2.50 per square foot.
Under that system, the Center West building at 10877 Wilshire Blvd. is ranked No. 4 on the list. Although rents range up to $4 a square foot higher than SunAmerica they start at $2.95. With a 17.5 percent vacancy rate, the direct weighted average system puts Center West in the No. 4 position.
All of the figures are asking rates, which means that leases aren’t necessarily signed at those figures after negotiations are finished.