The Wilshire Corridor mustered a slight improvement last quarter with some unusual help from the Park Mile.
Typically overshadowed by Miracle Mile, the neighborhood was the top performer in the submarket, absorbing close to 20,000 square feet. That dropped its vacancy rate more than two points to 25.9 percent since the first quarter, according to Jones Lang LaSalle Inc.
Brian Niehaus, a vice president at the brokerage, said that’s not surprising to him. Last quarter, his firm represented some cost-conscious tenants who moved out of the Miracle Mile market, where rates rose 12 cents to $2.64 a square foot, to Park Mile, where rents held steady at $2.30.
Among them was the Alzheimer’s Association, a non-profit research and support group. By moving two miles to 4221 Wilshire Blvd. from 5900 Wilshire, the organization cut its rent by 50 percent on a comparable 11,000-square-foot lease.
“It’s pretty staggering when you look at things this way,” he said. “That’s why so many non-profits look at Park Mile.”
That’s not to count out the strength of the Miracle Mile, which is still an alternative for entertainment and professional businesses seeking refuge from higher-rent areas.
For example, 6100 Wilshire Blvd. is nearly fully occupied after a flurry of large leases at the beginning of the year. The only offices available are about 3,000 square feet, too small a floor plate for even a midsize firm, said leasing agent Lisa St. John, principal at L.A. Realty Partners.
“We are continuing to see more tenants fleeing the Hollywood market because of the high rates and looking for more economic alternatives,” she said.
Indeed, there might be evidence desirable space is filling up as absorption slowed to 3,635 square feet. The vacancy rate in the neighborhood fell to 12.4 percent, three points lower than a year earlier but just one-tenth of a point down from the first quarter.
Meanwhile, Wilshire Center and Koreatown continued to struggle as the neighborhood gave back space.
The overall Wilshire Corridor absorbed a little more than 16,000 square feet, nudging down vacancies two-tenths of a point to 18.2 percent as asking rents rose a nickel.
Neihaus said the corridor is performing as expected, given the tepid economic recovery.
“There’s quite a bit of activity, but positive absorption is fractional. This is just above treading water,” he said.
– Jacquelyn Ryan
Associated Estates Realty Corp. bought the Miracle Mile’s Desmonds Tower at 5500-5528 Wilshire Blvd. from BlackRock Inc. and Legacy Partners Commercial Inc. for $37 million. The new owner plans to build a 13-story apartment building behind the office structure.
RREEF, a member of Deutsche Bank Group, put a 49 percent stake in the Wilshire Courtyard, at 5700 Wilshire Blvd., on the market. The building is home to E! Entertainment, the Oprah Winfrey Network and Business Journal, and could be an attractive building for investment funds or other institutional owners, sources said.
CIM Group LP bought two retail properties, at 359 and 417 S. La Brea Ave., from Chrysler Group Realty Co. LLC for $10.5 million. The prominent Hollywood developer has not yet announced specific plans for the site, but has requested permits to demolish the property and build a one-story retail building.
Essex Property Trust Inc. bought a 90-unit apartment building at 690 S. Catalina St. for $23.7 million from Northwestern Mutual Life Insurance Co. It was one of the largest multifamily deals in Koreatown this year. Studio, and one- and two-bedroom units average about 810 square feet with a monthly rental rate of about $1,860.
Japan Foundation Los Angeles moved into more than 10,000 square feet at 5700 Wilshire Blvd. The non-profit, which offers Japanese-language and etiquette classes among other services, moved from 333 S. Grand Ave. in downtown Los Angeles to be closer to other cultural institutions.