Real Estate Quarterly: SPECIALTY OFFICE

While the coworking sphere faced difficulties early in the pandemic, some operators see a strong future ahead. Coworking companies currently occupy about 4.7 million square feet of space in L.A. Key to attracting workers eager to get away from their home offices? Flexibility.

ALSO IN THIS SECTION: Culver City is becoming a hub for media and entertainment companies with heavy hitters such as Amazon.com Inc., Apple Inc. and Warner Bros. Discovery leasing space. Companies such as Hackman Capital Partners and Lowe, meanwhile, have been developing in the area.

Additional Content:

Coworking Returns

Entertainment Hub

 

Downtown

Downtown’s second-quarter office vacancy rate rose to 22.6%, up from 22.4% the previous quarter and 19.3% the previous year. There was no office product under construction during the quarter and negative 96,779 square feet of space was absorbed in the market. Asking rents were up 1 cent year over year and quarter over quarter at $3.84 a square foot.

Main Events

• Laguna Point Properties purchased a collection of five multifamily buildings in downtown for a combined $402 million.
• East West Bank signed a lease for more than 11,000 square feet at 888 W. 6th St. with landlord Livingstone.
• Calabasas-based brokerage Lee & Associates Commercial Real Estate Services opened a new office in downtown, a flagship location for the company and part of its future expansion plans.
• Dykema Gossett, Grant Thornton and Esquire Depositions have signed leases at Coretrust Capital Partners’ FourFortyFour South Flower.

 

Hollywood

Hollywood’s office vacancy rate decreased to 27.1%, down from 29.8% the previous quarter and 30.1% the previous year. Rents increased to $5.37 a square foot, up 1 cent over the previous quarter but down 3 cents over the previous year. Net absorption was 131,744 square feet. There was no construction during the quarter.

Main Events

• Two parcels on the border of West Hollywood and Hollywood with redevelopment potential sold for $46.5 million. The adjacent properties are at 1000 N. La Brea in West
• Hollywood and 1011 N. Sycamore Ave. in Hollywood.
  Company 3 signed a 60,000-square-foot expansion lease at Brentwood-based Hudson Pacific Properties Inc.’s Harlow office building at the Sunset Las Palmas Studios.

 

Westside

The Westside office vacancy rate increased to 20.1%, up from 19.2% the previous quarter and 16% the previous year. Asking rates for Class A space on the Westside was $5.61 a square foot, steady quarter over quarter but down 7 cents from the previous year. There was 2.7 million square feet of office space under construction, including 561,103 square feet in Culver City, 825,000 square feet in Century City and 1.3 million square feet in West L.A. There was negative 99,811 square feet of net absorption on the Westside during the quarter.

Main Events

• Hudson’s Bay Company’s real estate and investments portfolio business is revitalizing the area associated with Saks Fifth Avenue around Wilshire Boulevard in Beverly Hills to include a pair of office buildings, apartments, retail and dining.
• Vectra Management Group sold an office building at 640 N. Sepulveda Blvd. in Bel-Air for $32.5 million.
• Westwood-based Stockdale Capital Partners sold two medical office properties at 9090 Wilshire Blvd. in Beverly Hills and 2825 Santa Monica Blvd. in Santa Monica in a $156 million deal.
• Santa Monica-based Douglas Emmett Inc. purchased a 120-unit property at 1221 Ocean Ave. from Newport Beach-based Irvine Co. for $330 million.

 

Tri-Cities

Second-quarter office vacancies increased in the Tri-Cities submarket of Burbank, Glendale and Pasadena to 17.9%, up from 16.5% the previous quarter and 14.9% the previous year. Negative 176,664 square feet was absorbed in the quarter, while 1.2 million square feet was under construction. Rents decreased 2 cents quarter over quarter but rose 7 cents year over year to $3.71 a square foot.

Main Events

• Sawtelle-based Blatteis & Schnur Inc. and Hayward-based Felson Cos. purchased a 28,421-square-foot retail property in Pasadena for $52.3 million, or $1,838 per square foot, a record for Colorado Blvd. and the city of Pasadena.
• The 126,500-square-foot Glendale Financial Square sold for $27.5 million.

 

Wilshire Corridor

Wilshire Corridor’s second-quarter office vacancy rate rose to 31%, up from 30% the previous quarter and 26.5% the previous year. Negative 113,628 square feet was absorbed into the market and no new office product was under construction. Asking rents held steady at $2.56 a square foot. Asking rents in Miracle Mile were much higher at $4.41 a square foot.

Main Events

• Century City-based Optimus Properties purchased Temple KT, a portfolio of seven apartment communities in Koreatown and Echo Park totaling 91 units.
• A multifamily community in Koreatown at 900 S. Vermont Ave. was given a $75 million mortgage loan.
• Onni Group of Cos. purchased a 1.4-acre site at 5350-5376 Wilshire Blvd. in Mid-Wilshire as a high-rise development opportunity.

 

Santa Clarita Valley

Santa Clarita Valley’s office vacancy fell to 22%, down from 22.4% the previous quarter but up from 20.6% the previous year. Net absorption was 10,058 square feet and there was no office product under construction. Asking rents for Class A office space fell 1 cent quarter over quarter but rose 3 cents year over year to $2.86 a square foot.

Main Events

• A portfolio of eight grocery-anchored retail properties including the Northpark Square Village in Valencia sold for roughly $278 million.
• A multi-tenant industrial building at 26858 Ruether Ave. in Santa Clarita sold in a 1031 exchange transaction.
• The Westridge Executive Plaza at 26650 The Old Rd. in Valencia sold for $13.7 million.

 

San Fernando Valley

The San Fernando Valley’s office vacancy rate increased to 19%, up from 18.6% the previous quarter and 18% the previous year. Rents held steady quarter over quarter but decreased 2 cents year over year to $2.94 a square foot. Net absorption was negative 191,171 square feet and 309,673 square feet was under construction.

Main Events

• A 52-unit multifamily property at 13907 Oxnard Street in Van Nuys received a roughly $10 million loan.
• MannKind Corp. leased roughly 24,000 square feet of office space at 30930 Russell Ranch Rd. in Westlake Village.
• The Villas at Woodland Hills, which contains 324 units, sold for $134.5 million.
• The Fusion Warner Center at 21601 Erwin St. in Woodland Hills traded hands for $96 million.

 

South Bay

South Bay’s industrial market vacancy was a mere 0.7%, down from 1.3% the previous year. Roughly 1.5 million square feet was under construction, while 2 million square feet sold or leased during the quarter. Rents rose to $1.81 a square foot, up 19 cents over the previous year and 74 cents quarter over quarter.

Main Events

• A nearly 260,000-square-foot creative office campus at 555 Aviation Blvd. in El Segundo sold for $205.5 million to Rialto Capital Management.
• Lavissani purchased a development site at 619 S. Prairie Ave. in Inglewood near the new SoFi Stadium for nearly $11 million.
• Atlas Capital purchased a 5.37-acre office-to-industrial redevelopment opportunity at 19401 S. Vermont Ave. in Torrance for $39.8 million from Harbor Gateway.

 

San Gabriel Valley

The San Gabriel Valley’s first-quarter industrial vacancy rate increased to 0.8%, down from 1.4% the previous year. Asking rents were $1.67 a square foot, up 19 cents over the previous quarter and 79 cents the previous year. Roughly 2.7 square feet sold or leased during the quarter and 2 million square feet was under construction.

Main Events

• Newport Beach-based IHP Capital Partners and Vancouver-based Intracorp Homes acquired a 2.9-acre site in Arcadia that will be developed into Miren, a collection of 33 single-family homes.
• Duke Realty Corp. purchased an industrial asset at 14724 Proctor Ave. in the City of Industry for roughly $54 million.
• Brentwood-based Rexford Industrial Realty Inc. purchased an industrial property at 13535 Larwin Circle in Santa Fe Springs for $15.5 million.