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Wednesday, Feb 21, 2024

Real Estate Quarterly: Q4

Downtown

Downtown’s fourth-quarter office vacancy rate was 26.8%, steady quarter over quarter but up from 22.7% the previous year. There was no office product under construction during the quarter and a negative 3,564 square feet of space was absorbed in the market. Asking rents were down 3 cents quarter over quarter but up 1 cent year over year to $3.87 a square foot.

Opened: The Winfield was originally constructed to house former retail department store Foreman & Clark.

In the biggest downtown office sale of 2023, the Aon Center sold for $148 million. Carolwood LP acquired the 1.1 million-square-foot building along with private investors Daniel Abrams and Adam Tischer. Colliers represented Carolwood, and Newmark Group Inc. represented Shorenstein, the seller. The property sold for 45% less than its last purchase price.

Sonder Holdings Inc. opened two new apartment-style hotels in the fourth quarter of last year. The 125-key Winfield opened in October, and the 110-key Craftsman hotel opened in December. Both are adaptive reuse projects that most recently housed office space.

Daum Commercial Real Estate Services completed the sale of a 7,100-square-foot industrial warehouse property located in the Arts District for $4.4 million. DUAM Commercial represented Fabriquer LLC as the buyer in the sale. Chad Maxner of Maxner Real Estate represented the seller, Part-Rosin Properties LLC.

HOLLYWOOD

Hollywood’s office vacancy rate fell to 27.5%, down from 28.9% the previous quarter and 27.6% the previous year. Rents fell 6 cents quarter over quarter and 21 cents year over year to $4.92 a square foot. Net absorption was 110,222 square feet. There were 145,300 square feet under construction during the quarter.

Leased: Bristol Farms signed a 23,000-square-foot lease in the heart of Hollywood.

Upscale regional grocer Bristol Farms signed a 23,000-square-foot lease on the ground floor of Modera Argyle, a luxury community with 276 apartment homes in the heart of Hollywood. Kennedy Wilson Brokerage represented apartment developer Mill Creek Residential in the transaction. The lease marked Bristol Farm’s 14th location in Southern California.

A joint venture of Century City-based LaTerra Development and New York-based Clarion Partners received $90 million in financing for The Louise, a mixed-use project in East Hollywood. The newly constructed project has 246 residential units and 20,500 square feet of ground-floor retail.

Westside

The Westside office vacancy rate increased to 25.8%, up from 25% the previous quarter and 22.1% the previous year. Asking rates for Class A space was $5.82 a square foot, up 34 cents year over year. There was 1.82 million square feet of office space under construction during the quarter including 825,000 square feet in Century City.

The Ventana, a 405-unit luxury low-rise multifamily community in Playa Vista, received $115 million in financing. Jones Lang LaSalle Inc. arranged the financing on behalf of the borrower, North Carolina-based Barings Real Estate, to secure the cash-neutral five-year loan.

Beverly Hills-based boutique home builder Etco Homes unveiled 425 Palm, 20 luxury condominiums. Condos range from one-bedroom to three-bedroom units and start at $2.7 million. 

A 13,000-square-foot double-lot property sold for $12 million

A 13,000-square-foot double-lot property, located on a corner lot at Hamel and 3rd in Beverly Grove, sold for $12 million after a high-stakes bidding war that went $500,000 over the asking price. It set a price-per-square-foot record in the area. Lyon Stahl Investment Real Estate represented the seller in the transaction.

CBRE Group Inc. opened a 21,500-square-foot technology-enabled office on the 8th floor of 2000 Avenue of the Stars at the Century Park complex. The new office space is designed to internally support hybrid work and employee well-being.

Tri Cities

Fourth-quarter office vacancies increased in the Tri-Cities submarket of Burbank, Glendale and Pasadena to 27%, up from 26.5% the previous quarter and 21.6% the previous year. Negative 469,949 square feet was absorbed into the market, while nearly 146,000 square feet was under construction. Rents fell 6 cents quarter over quarter, but rose 13 cents year over year, to $3.87 a square foot.

Coretrust Capital Partners LLC’s Pasarroyo office property headed into foreclosure this quarter. Located at 251 South Lake Ave. in Pasadena, the four-building complex made up of both office and retail space spans 640,000 and hit auctions on Dec. 20. There were no bidders beyond the opening offer, sending the full-block property back to the care of its lender, Chicago-based Heitman LLC.

Wilshire Corridor

Wilshire Corridor’s fourth-quarter office vacancy rate rose to 36.4%, up from 35.7% the previous quarter and 32.7% the previous year. Negative 99,459 square feet was absorbed in the market, and no new office product was under construction. Asking rents increased 4 cents quarter over quarter and 20 cents year over year to $2.77 a square foot.

Leased: Two tenants signed leases at Decron’s Mid-Wilshire office building.

Decron Properties scored two new tenants at its Class A Mid-Wilshire office headquarters building, which recently underwent renovations. The two tenants, the Federative Republic of Brazil and Hanger Clinic, each signed long-term leases with Decron totaling over 20,000 square feet. The building, which is now 92% leased, is located near the Los Angeles County Museum of Art and the Academy Museum of Motion Pictures.

Santa Clarita

Santa Clarita Valley’s office vacancy rose to 28.1%, up from 22% the previous year. Net absorption was 3,831 square feet, and there was no office product under construction. Asking rents increased 1 cent quarter over quarter and 13 cents year over year to $2.96 a square foot.

Asset: A new Bliss Car Wash in Valencia sold for $3.72 million.

Corona del Mar-based Hanley Investment Group arranged the sale of a new Bliss Car Wash in Valencia for $3.72 million. The deal marks Hanley Investment Group’s 80th car wash sale in the last 48 months.

Four medical office condominiums were sold in Valencia for a combined purchase price of $2.8 million. Located at 27335 Tourney Rd., the condos belong to a Class A, three-story medical office condominium complex called Tourney Place.

San Fernando

San Fernando Valley’s office vacancy rate rose to 26%, up from 25.4% the previous quarter and 21% the previous year. Rents fell 1 cent quarter over quarter and 3 cents year over year to $2.91 a square foot. Net absorption was negative 212,090 square feet. There were 147,500 square feet under construction during the quarter.

Expanding: The Hilton Universal City Hotel is getting a companion hotel on the same property.

In an expansion plan unveiled in November, Sun Hill Properties Inc., operator of Hilton Universal City Hotel, announced plans to build a 395-key hotel addition directly adjacent to the existing hotel. 

Summerset Village, a 280-unit luxury multifamily community located in the foothills of the Santa Susana Mountains in Chatsworth, sold for $107 million. 

South Bay

South Bay’s industrial-market vacancy increased to 4.8%, up from 4% the previous quarter and 1.5% the previous year. Roughly 1.8 million square feet were under construction, while 2.6 million square feet were sold or leased during the quarter. Rents fell to $1.90 a square foot, down 6 cents quarter over quarter but steady year over year.

 An industrial portfolio in Gardena was purchased for $55 million by a joint venture of Seal Beach-based repositioning firm Harbor Associates LLC and Austin-based investment firm Evergen Equity. The portfolio, located at 690-760 W 190th St., spans 126,000 square feet total and consists of four adjacent properties.

San Gabriel

The San Gabriel Valley’s vacancy rate increased to 3.9%, up from 2.2% the previous quarter and 1.4% the previous year. Asking rents were $1.67 a square foot, down 5 cents quarter over quarter and 7 cents year over year. Roughly 2.6 million square feet were sold or leased during the quarter, and 2.7 million square feet were under construction.

C.W. Driver Cos. completed construction on and opened Begonia Place, a $37.8 million mixed-use residential project in Temple City. The four-story building includes 19 multifloor penthouses within the 74 apartments and 14,000 square feet of ground-floor retail space. The project marked the firm’s first partnership with owner Begonia Real Estate Development.

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