L.A.-area office rents rise as once second-tier markets gain favor with new players
Office landlords in Los Angeles County neighborhoods formerly considered declasse raised rents last quarter, reflecting the shift in tenants’ perceptions of desirable addresses.
Markets such as Mid-Wilshire, Culver City and Hollywood once spurned by prosperous, image-conscious firms are now the first choice for many, said Petra Durnin, director of research and analysis for Southern California at real estate brokerage CBRE.
In decades past, staid financial and legal firms kept the center of gravity primarily in downtown L.A. and the Westside, she said. “It used to be that if you weren’t in Century City, you weren’t a player.”
Technology and entertainment companies, now the ascendant drivers of the local economy, are gravitating to smaller markets or cities that have ample housing and personality. Mass transit is a big plus.
“Nobody wants to sit two hours in traffic,” she said. “We want to live someplace with a cool urban vibe and that is starting to happen across Los Angeles.”
Netflix, which has long had a Beverly Hills office, leased an entire 14-story office building recently completed on Sunset Boulevard in Hollywood. Also last year, cable channels MTV and BET moved into the community from the Westside.
In the fourth quarter, average asking rents in Hollywood rose to $4.41 per square foot per month from $4.26 in the same period the previous year and $4.35 in the third quarter, according to CBRE.
Mid-Wilshire rents hit $2.14 a square foot in the fourth quarter compared with $1.96 a year ago and $2.02 last quarter.
Office vacancy rose in several markets as new offices were built, but Durnin expects the economy to remain healthy enough for that space to be absorbed over the next two or three years.
Los Angeles County’s average asking rent rose to $3.37 a square foot in the fourth quarter, compared with $3.03 a year ago and $3.32 in the third quarter, CBRE said. Overall vacancy was 13.9% in the fourth quarter, up from 12.8% a year ago but down from 14.4% in the third quarter.
Twitter: @rogervincent
