Though demand has yet to fully recover from the downturn, the Westside office market posted its best average vacancy rates and asking rents in more than two years.
Westside submarkets from Beverly Hills to Brentwood to Marina del Rey-Culver City all saw modest drops in vacancy rates in the second quarter, according to Jones Lang LaSalle Inc. The overall vacancy rate in the sprawling market dropped six-tenths of a point to 16.3 percent, the lowest since the end of 2009. Class A asking rents rose to $3.70, the highest since the first quarter of 2010.
Experts said the numbers reflected a rebound but cautioned against reading too much into one quarter.
“There’s an overall sentiment that tenants are financially a little bit stronger and able to make longer-term commitments,” said Blake Searles, a broker at Jones Lang LaSalle. “A lot of good things are happening, though there still is a lot of available space out there.”
For once, the falling vacancies weren’t fueled by Santa Monica, which has been red hot since last year as tech firms snatched up creative office space. The city actually gave back 137,000 square feet, the most of any Los Angeles County submarket in the quarter, pushing up its vacancy rate to 11.8 percent. Searles partly blamed departures by large tenants such as law firm Greenberg Traurig LLP, which moved from the Water Garden office campus to Century City. Still, asking rents rose two cents to $4.39, again the highest in the county.
Elsewhere, Beverly Hills and Century City saw vacancies drop about one point each, to 12.3 percent and 15.8 percent, respectively. Beverly Hills has seen vacancies fall some six points since last year, with demand particularly high in its Golden Triangle area around Rodeo Drive. West Hollywood gave up some space but maintained the county’s lowest vacancy rate at 6.6 percent.
Mike Catalano, executive vice president at Studley Inc., said the mixed signals reflect a market coming off the bottom, but also leasing demand that would not fully come back until the region’s employment outlook improves.
“While there might be some specific submarkets doing well – and I think Santa Monica, Culver City and the triangle portion of Beverly Hills are among those – we don’t think that an overall spike is in the near future,” Catalano said. “Our clients are tenants and they are still trying to be more efficient and cost-conscious whenever possible. They are not doing a whole lot of permanent hiring.”
– Alfred Lee
Watt Cos. of Santa Monica bought the former American Shower Building at 3401 Exposition Blvd. in Santa Monica from investment partnership Centinela Studios LP for $18 million. Watt intends to redevelop the interior of the 54,000-square-foot building into creative office space.
Law firm Greenberg Traurig LLP moved its L.A. office into 70,000 square feet at 1840 Century Park East in Century City. Terms of the deal were not disclosed. The firm previously occupied more than 100,000 square feet of space at Santa Monica’s Water Garden complex.
Financial market data company Interactive Data Corp. renewed its lease for 23,000 square feet at the Santa Monica Business Park, 2901 28th St., with landlord Equity Office Properties Trust. Financial terms were not disclosed but industry sources estimate the deal’s value at roughly $4.5 million.
CBS Television Distribution signed a five-year lease for 53,000 square feet at the Water Garden office complex, 2450 Colorado Ave. It currently occupies 70,000 square feet at the Colorado Center in Santa Monica and will move. Terms of the deal were not disclosed.
Restaurant chain California Pizza Kitchen Inc. signed a sublease with Fox Interactive Media for nearly 34,000 square feet at 12181 Bluff Creek Drive in Playa Vista. The company will move its headquarters there from Century Boulevard near Los Angeles International Airport.