West Los Angeles : Office Occupancy Declines

When it comes to office space, the Westside’s loss has been Santa Monica’s gain. That’s one of the findings of a new Grubb & Ellis report assessing mid-year office space occupancy in West Los Angeles and nearby cities. According to the report, office occupancy on the Westside, not including Santa Monica, declined from 81.5% last year to 81.1%. In Santa Monica, however, office occupancy rose from 82.3% to 87.4%. Santa Monica also led the entire Westside in office absorption, or the net change is office occupancy, gaining more than 76,000 square feet of space in the second quarter.

“Santa Monica has been the beneficiary of deals migrating from the Valley and from the Culver City and Marina del Rey markets,” said Grubb & Ellis Vice President Peter Best.

Big losers on the Westside were the Miracle/Park Mile and Beverly Hills areas. In the recently ended quarter, Miracle/Park Mile posted an office vacancy rate of 24.2% and a negative absorption of nearly 134,000 square feet. Beverly Hills reported a vacancy rate of 23.3% and negative absorption of 84,750 square feet. So far this year, Beverly Hills has lost 142,593 square feet of occupancy.

Most of Santa Monica’s leased office space was accounted for by the 660,000-square-foot Water Garden project, Best said. Located between Colorado and Olympic boulevards on 26th Street, the complex is more than 90% leased and has tenants such as Microsoft and the law firm of Haight, Brown & Bonesteel. Despite that patch of bright news, the big picture remains grim, according to Grubb & Ellis. Although the Westside is the only office market in the county this year with speculative office space being built, only 63,750 square feet of office space has been built or is under construction. And all such space is under construction in Santa Monica. A year ago, more than 557,000 square feet of space was under construction, with office projects scattered throughout the Westside.