Office Vacancy Rates Continue to Fall in 1st Quarter : Real Estate: At 18.5%, levels are down from 20.1% in last period of 1992. Rental prices are also still dropping.
Office vacancy rates in the San Fernando, Santa Clarita, Conejo and Simi valleys continued their downward trend in the first quarter.
However, the overall level of office vacancies remained high, at 18.5%, and rental price rates continued to fall as landlords competed for tenants.
The vacancy rate in the first three months of this year was down from the 20.1% rate in the fourth quarter of 1992, according to a survey by commercial real estate broker Cushman & Wakefield of California Inc. It was the fifth consecutive quarterly decline in the region’s office vacancy rate. In the first quarter a year earlier the vacancy rate was 22%.
By comparison, the office vacancy rate for downtown Los Angeles in the first quarter was 25.2%.
Rents in the Valley region fell for the fifth straight quarter to an average of $1.80 per square foot. Fourth quarter rents averaged $1.84, and in the first quarter of 1992 the average rent was $1.93 a square foot.
The lowest vacancy rate in the first quarter was 17.3% in the East Valley, which includes Glendale and the media district in Burbank, Universal City and Studio City.
But the report noted some inauspicious developments for the East Valley. Several financial institutions in Glendale are downsizing. Sony Pictures Entertainment is subleasing 200,000 square feet of office space in Burbank. And plans for proposed projects, including two NBC buildings, have been abandoned.
The West Valley’s vacancy rate was 19% in the first quarter. The main office market in that area is Warner Center in Woodland Hills, which has large amounts of empty space. The controversial Warner Ridge office and condominium development is expected to break ground in June near Warner Center, and insurer 20th Century Industries has signed a lease to move from Warner Center to Warner Ridge in 1995.
Continued downsizing by aerospace and other companies will also add to available office space in the West Valley, which will further depress rental rates, Cushman & Wakefield said.
The central Valley, including Encino, Sherman Oaks and Van Nuys, had a 19% vacancy rate in the first three months of the year. Legal, accounting and other small firms continue to find Ventura Boulevard offices attractive, the report said, but rental rates are falling as empty space remains on the market for long periods and West Valley offices compete for tenants.
Valencia and Newhall are also included in the central Valley figures.
The Conejo Valley and Simi Valley had a combined first quarter vacancy rate of 19.3%.
Lower land costs, proximity to freeways and a large labor pool have helped transform these areas into a competitive office market, Cushman & Wakefield said.
But with vacancies remaining high, many proposed projects have been canceled or delayed and none are under construction.
