51.5 F
Laguna Hills
Thursday, Mar 28, 2024
-Advertisement-

City of Angels

The Los Angeles region saw moderate leasing activity during the first quarter. Tenants are acting cautiously, but are renewing as leases expire or as expansion space becomes necessary.

Overall leasing volume in the first quarter was at 3.2 million square feet, up 13% from the fourth quarter, but down 26.8% from last year.

Asking rents are on the rise. The overall rate saw an annual increase of $1.13 to $29.34.

Rental rate growth can be partially attributed to increased expenses such as insurance, utilities and real estate taxes. Also, space is at a premium, with many better quality buildings more than 90% leased.

Moreover, while some new space is available, little construction is under way on projects with expected delivery within the next year.

Many projects under construction are projecting completion dates more than a year and a half out.

The 400,000-square-foot Red Building, named for its planned red glass exterior and designed by world-famous architect Cesar Pelli, has broken ground in West Hollywood. This building, slated for delivery in 2009, is the third phase of the Pacific Design Center.

Another project that just broke ground is the first phase,two buildings totaling 460,800 square feet,of Horizon at Playa Vista.

This is the first of several projects planned by various developers on the “Lower Westside.” These projects include Corporate Pointe, Howard Hughes Center and Tishman Speyer’s Playa Vista office/studio development. It is not expected that any of these projects will be completed until late 2008 or early to mid-2009.

Also, construction has just begun on 2900 West Alameda in Burbank. Phase I of this project,a 525,000-square-foot tower,is expected to deliver in late 2008. Phase II will comprise approximately 375,000 square feet. Developer M. David Paul bought the entitled site from NBC.

Construction on the LNR Warner Center Phase IV in Woodland Hills is well under way. This project consists of two buildings totaling 510,000 square feet,Building D, scheduled for completion during the fourth quarter of this year, and Building E, slated for delivery in the second quarter of 2008.

In Culver City, Symantec Campus,two buildings totaling more than 500,000 square feet,is expected to deliver in October. Building 1 is set to be occupied by Symantec Corp. The second building will have just less than 240,000 square feet available for other tenants. In Santa Monica, work on the 67,000-square-foot Lantana East project is moving forward, with completion still planned for this September.


Rents

Overall rental rates increased to $29.34 while class A rents jumped to $31.30. Rental rates are up compared to one year ago in all submarkets led by Santa Monica, which was up 32.5%, Hollywood,up 17.5%,and the Wilshire District, up 12.6%.

Class A rents have posted dramatic annual increases in Santa Monica, up 32.8%, Westwood, up 30.9%, and Beverly Hills, which was up 21%.

Leasing activity in the past four quarters totaled 14.1 million square feet, the lowest total since the third quarter of 1999.

Class A leasing activity in the past four quarters was down 11.3% to 11.2 million square feet, compared to a year ago. Leasing in class B and C properties was up 1.5% to 2.9 million square feet compared to the first quarter of 2006.


Availability Rates

Overall and class A rates both ticked down 0.1 percentage point during the first quarter to 12% and 12.4% respectively.

Availability rates are down quite evenly across the region, a further indication of solid demand and steady business growth. Class A availability rates are down 1 to 2 percentage points in nearly every submarket.


Buildings Flip

Sales activity remained strong in the first quarter. Downtown, two prominent properties were sold twice in the same month. The buildings, located at 555 S. Hope and 350 S. Grand, were part of the 532-property Equity Office Properties Trust Inc. portfolio bought by Blackstone Group in February.

The two buildings were then immediately sold to Maguire Properties Inc. as part of a 24-building package. Although the two downtown properties are not included, Maguire has already announced plans to sell a portion of its Southern California portfolio.

Analysis by Studley Inc.

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-
-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-