Area Office Vacancy Rate Rises to 16%
The vacancy rate for office space in the San Fernando and Conejo valleys rose to 16% by the end of the third quarter of 1985, up from 14% three months earlier, according to a new study.
But the vacancy rate in those areas was lower than in downtown Los Angeles or on the Westside, and rose more slowly, the survey found. By the end of the third quarter, the downtown vacancy rate was 17.5%, up from 10%, and the Westside’s was 17%, up from 14%.
The survey was conducted by Grubb & Ellis, the nationwide realty firm. In the valleys it covered all of the 223 privately owned office buildings from Burbank to Thousand Oaks that have more than one tenant and contain more than 20,000 square feet.
New Space on Market
In that area, it found 2.1 million of the 13.3 million square feet of existing office space was unleased. The survey also counted 2.9 million square feet of space under construction, with only 4% of it leased in advance.
With all that space coming on the market, the vacancy rate for completed buildings in the area will certainly rise before it falls, said John Battle, an assistant vice president with Cushman & Wakefield in Warner Center.
He said the Grubb & Ellis study appears accurate, including the finding that conditions are better for commercial property owners in the Valley area than in, say, the Wilshire corridor.
“The Westside is a blood bath right now,” he said. “I think it’s probably the worst place to be a landlord.”
4 Market Segments
The Conejo Valley, one of the four market segments in Grubb & Ellis’ study of the San Fernando Valley-Conejo Valley office market, had the highest percentage of unleased office space. It had a vacancy rate of 21%, although that was down from 25.3% in the second quarter and 33% in the first.
The East Valley, defined by Grubb & Ellis as Burbank, Universal City, North Hollywood, and Studio City, had a vacancy rate of 20%, down from 22% in the second quarter and 23% in the first.
The central Valley--Sherman Oaks, Van Nuys, and Encino--had the most space and the lowest vacancy rate, just 11%, up from 8% the preceding quarter.
The West Valley--Woodland Hills, Calabasas, Canoga Park and Tarzana--had a vacancy rate of 16%, up from 10%. It has the second largest supply of office space among the four local market segments.
