This article has been revised and corrected from the original version.
The Covid-19 pandemic had a significant impact on L.A.’s real estate market. As many companies grapple with what their future real estate needs are, the office vacancy rate has risen to 21.3%, up from 13.4% during the third quarter of 2019, according to data from Jones Lang LaSalle Inc.
And that doesn’t tell the full story, as a record high of 9.6 million square feet of sublease space was on the market during the quarter.
Meanwhile, interest in self-storage facilities grew during the pandemic with a handful of new and old investors in the asset class expanding their reach.
Inside this section:
DOWNTOWN
Downtown’s third-quarter office vacancy rate fell to 22.1%, down from 22.6% the previous quarter but up from 19.9% the previous year. There was no office product under construction during the quarter and 7,749 square feet of space was absorbed in the market. Asking rents were down 2 cents quarter over quarter and 1 cent year over year to $3.82 a square foot.
Main Events
- The iconic Union Bank Plaza at 445 S. Figueroa St. sale was pending at $155 million. Waterbridge Capital is purchasing the asset from KBS Realty Advisors at a discount. The roughly 702,000-square-foot property hit the market last year and was expected to fetch $250 million.
- Meyer Brown signed on for 57,018 square feet at the Wells Fargo Center North Tower at 333 S. Grand Ave. with landlord Brookfield Properties.
- First Capitol Consulting Inc. has signed a lease for 12,495 square feet at the Biltmore Court property at 520 S. Grand Ave. with Richfield Hospitality Services Inc.
OFFICE MARKET AT A GLANCE
INVENTORY: 31.2 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $3.82
HOLLYWOOD
Hollywood’s office vacancy rate rose to 27.3%, up from 27% the previous year but down from 30.9% the previous year. Rents held steady quarter over quarter at $5.37 a square foot. Net absorption was negative 15,055 square feet. There was no construction during the quarter.
Main Events
- West Hollywood-based Bardas Investment Group and Bain Capital Real Estate announced plans for the $600 million redevelopment of the former Television Center at 6311 Romaine Street in Hollywood. The proposed changes would transform the aging facility into a modern 620,000-square-foot urban studio campus. The new construction will include a mid-rise creative office building and a six-story office building offering tailored creative office space.
- Outfront Media signed a 34,000-square-foot lease for an entire building at 1520 N. Cahuenga Blvd. in Hollywood. The space will be its Los Angeles headquarters office.
- CMNTY Culture purchased a property at 6767 Sunset Blvd. for $37.5 million.
OFFICE MARKET AT A GLANCE
INVENTORY: 4.8 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $5.37
SANTA CLARITA VALLEY
Santa Clarita Valley’s office vacancy fell to 21.4%, down from 22% the previous quarter but up from 21.2% the previous year. Net absorption was 15,245 square feet and there was no office product under construction. Asking rents fell 6 cents quarter over quarter and 7 cents year over year to $2.80 a square foot.
Main Events
- Pelican BioThermal, a manufacturer of temperature-controlled, thermally protected packaging, signed a five-year, 54,060-square-foot industrial lease at 28308 Industry Drive in Valencia. It is a free-standing warehouse and distribution space with two ground-level doors, six dock-high positions and 28-foot clearance height ceilings.
- Lyons Properties sold an office building at 23206 Lyons Ave. in Santa Clarita for $11.3 million.
OFFICE MARKET AT A GLANCE
INVENTORY: 2.6 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $2.80
SAN FERNANDO VALLEY
San Fernando Valley’s office vacancy rate rose to 19.7%, up from 19% the previous quarter and 18.1% the previous year. Rents increased 2 cents year over year and quarter over quarter to $2.96 a square foot. Net absorption was negative 164,308 square feet. There was no construction during the quarter.
Main Events
- Ventura Property Management bought the 154-unit Brookside Terrace Apartments at 17200 Burbank Blvd. in Encino for $51.3 million.
- AVG Partners purchased the 91,339-square-foot Corporate Center in Calabasas from Majestic Asset Management Inc. for $35 million.
- Tarzana-based Gelt Inc. acquired Avalon Studio 4121 — a 149-unit apartment property at 4041-4121 Radford Ave. in Studio City — for $76 million.
OFFICE MARKET AT A GLANCE
INVENTORY: 32 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $2.96
TRI-CITIES
Third-quarter office vacancies increased in the Tri-Cities submarket of Burbank, Glendale and Pasadena to 19.6%, up from 17.9% the previous quarter and 15% the previous year. Negative 255,573 square feet was absorbed into the market, while 881,200 square feet was under construction. Rents increased 1 cent quarter over quarter and
5 cents year over year to $3.72 a square foot.
Main Events
- Brookfield Property Group sold the 117,868-square-foot Glendale Corporate Center at 425 E. Colorado St. for $23 million to Premier Place.
- San Diego-based developer Merlone Geier Partners proposed a $370 million redevelopment of a defunct Sears store in Glendale. The firm wants to construct a 682-unit residential complex with 38,100 square feet of space for a public park at the site.
OFFICE MARKET AT A GLANCE
INVENTORY: 22.5 million square feet
UNDER CONSTRUCTION: 881,200 square feet
CLASS A ASKING RENTS: $3.72
WESTSIDE
The Westside office vacancy rate decreased to 20%, down from 20.1% the previous quarter but up from 17.2% the previous year. Asking rates for Class A space on the Westside was $5.51 a square foot, down 10 cents quarter over quarter and 8 cents year over year. There was 2.6 million square feet of office space under construction during the quarter including 1.3 million square feet in West L.A. There was 122,339 square feet of net absorption on the Westside during the quarter.
Main Events
- California Home Builders purchased a 321,253-square-foot, 374-unit building at 5901-5921 Center Dr. near Playa Vista that it has rebranded as the Q Playa for $231 million.
- MCS Fox Hills Plaza, a subsidiary of M.C. Strauss Co., sold Fox Hills Plaza, a retail center in Culver City, for $56 million, or $941 per square foot, in an off-market transaction. The center was formerly anchored by Marshall’s, CVS and Chase Bank. It is near the Westfield Culver City mall.
- Brentwood-based GPI Cos. has announced plans for Overland & Ayres, a six-story, 201-unit apartment building proposed for West Los Angeles.
- Swiss international education company EF Education First and American Jewish University announced a deal for EF to buy AJU’s 35-acre campus in Bel Air for an undisclosed price.
OFFICE MARKET AT A GLANCE
INVENTORY: 52.7 million square feet
UNDER CONSTRUCTION: 2.6 million square feet
CLASS A ASKING RENTS: $5.51
WILSHIRE CORRIDOR
Wilshire Corridor’s third-quarter office vacancy rate rose to 31.5%, up from 31% the previous quarter and 27.4% the previous year. Negative 52,588 was absorbed in the market and no new office product was under construction. Asking rents held steady quarter over quarter at $2.56 a square foot. Asking rents in Miracle Mile were much higher at $4.44 a square foot.
Main Events
- Avanath Capital Management purchased a 669-unit Baldwin Village multifamily portfolio from Upside Investments Inc. for $220 million.
- The Tahan Family sold two properties at 310 S Virgil Ave. and 315 S Virgil Ave. in Koreatown for $41.2 million.
- A 140,000-square-foot retail property at 928 S. Western Ave. in Koreatown sold for $91 million.
OFFICE MARKET AT A GLANCE
INVENTORY: 11.4 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $2.56
SOUTH BAY
South Bay’s industrial market vacancy increased to 0.8%, up from 0.7% the previous quarter but down from 1% the previous year. Roughly 2.1 million square feet was under construction, while 3.1 million square feet sold or leased during the quarter. Rents rose to $1.94 a square foot, up 13 cents over the previous quarter and 80 cents year over year.
Main Events
- El Segundo-based Welcome Group Inc. purchased the 143-key Hyatt Place El Segundo for $49 million.
- Sares-Regis Group sold a 348-unit multifamily portfolio in Long Beach to Harbor Group International for $180 million.
- Rexford Industrial Realty Inc. purchased the reeway Business Center at 3901 Via Oro Ave. in Long Beach from Wonderful Co. for $20 million.
INDUSTRIAL MARKET AT A GLANCE
INVENTORY: 197 million square feet
UNDER CONSTRUCTION: 2.1 million square feet
ASKING RENTS: $1.94
SAN GABRIEL VALLEY
The San Gabriel Valley’s first-quarter industrial vacancy rate increased to 0.9%, up from 0.8% the previous quarter but down from 1.4% the previous year. Asking rents were $1.74, up 7 cents over the previous quarter and 80 cents over the previous year. Roughly 2.4 million square feet sold or leased during the quarter and 1.2 million square feet was under construction.
Main Events
- Unibail-Rodamco-Westfield sold Westfield Santa Anita in Arcadia for $538 million.
- Langdon Park Capital purchased a 138-unit multifamily property at 1829 E. Workman Ave. in West Covina from Abacus Capital Group for $48.6 million.
- Rexford Industrial purchased a 235,430-square-foot warehouse at 6000-6040 Bandini Blvd. in Commerce for $91.5 million from LBA Realty.
INDUSTRIAL MARKET AT A GLANCE
INVENTORY: 154.4 million square feet
UNDER CONSTRUCTION: 1.2 million square feet
ASKING RENTS: $1.74
