12% Office Vacancy Rate in Quarter Matches 5-Year Low
The San Fernando Valley office vacancy rate dropped to 12% in the fourth quarter of 1988, as low as it has been in the past five years, according to the realty firm Grubb & Ellis.
In comparison, for the same period, the office vacancy rate was 16% in downtown Los Angeles and 13% in West Los Angeles.
The Valley survey covers the area from Newbury Park to Burbank. In the fourth quarter, there was 2.2 million square feet of vacant office space out of an inventory of 18.3 million square feet.
According to Grubb & Ellis, building restrictions along Ventura Boulevard and the relatively small amount of new space being added make it likely that the rental market will remain tight this year. The survey said 9% of the 2.3 million square feet of office space under construction is already leased.
The East Valley market, which includes Burbank and Studio City, as usual posted the lowest vacancy rate, with 6%. Michael Howard, a senior marketing consultant with Grubb & Ellis, said he expects that area to pull in the Valley’s highest rental rates because of its entertainment industry tenants.
The highest vacancy rate, at 17.5%, was in the so-called “Technology Corridor,” which includes Thousand Oaks and Calabasas. The area offers lower rents than the rest of the Valley, and builders continue to put up offices in the hope that slow-growth movements elsewhere will force businesses to move farther west.
In the fourth quarter, the central Valley, which includes Encino and Van Nuys, posted a 15% vacancy rate. The rate for the West Valley, which includes Tarzana and Woodland Hills, was 11%.
Real estate agents said landlords no longer have to give as many concessions to sign tenants. Not long ago, landlords often had to give away one year’s free rent on a 10-year lease. Agents say eight free months is now the norm.