Office Leasing Strong In Class-A SoCal Buildings
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LOS ANGELES-While recovery is “very asset specific and submarket specific across the region,” the office leasing market in South Orange and Los Angeles counties is seeing an uptick in activity and demand, say Blaine Annett and Colby Annett, who lead the newly opened Los Angeles office of Stream Realty Partners. Blaine Annett tells GlobeSt.com, “Nice, quality buildings with strong ownership behind them have fared much better than the owners who are struggling just to hold onto the asset. Tenants don’t want to be in those types of buildings.”
He adds that owners who have maintained their buildings to a high standard and/or made significant capital improvements to their projects during the downturn are reaping the benefits now as demand has picked up and their buildings are making leases. This is being evidenced by increasing rental rates in certain regions, including the Irvine Spectrum and Aliso Viejo submarkets, which have seen a handful of larger leases get signed in 2012. Owners are beginning to increase the asking rental rates in these areas as the available supply has tightened up significantly.
Also, West L.A. and Santa Monica/Playa Vista remain strong submarkets in Los Angeles, and buildings that can provide tenants with creative/modern cool office space are being rewarded with rents at the higher end of the spectrum, the brokers say.
In addition, class-A office buildings in the Mid-Cities area continue to be very well leased, and options for tenants who want to be in this submarket bordering the L.A./Orange County line are scarce. Owners who have maintained their projects in first-class condition are able to receive some of the higher rental rates in the region.
Stream Realty’s Los Angeles office opened in July, the firm’s second office opening since announcing a national expansion plan earlier this year. “It was a natural progression for our office in Southern California as we grow and service our customers and make new relationships,” says Blaine Annett.
Colby Annett adds that the office is focused on Orange and L.A. counties, “and our goal is not to be the biggest real estate company, but deliver the best service.” He says that the firm is doing a lot of work on the agency side representing institutional owners by leasing their buildings. Clients include large institutional owners that own product across the country.
As GlobeSt.com previously reported, last month the brokers represented RREEF in a lease transaction for 30,813 square feet of office space on the third floor of Summit Office Campus in Aliso Viejo to Pacific World Corp. Previously located in Lake Forest, CA, the tenant was relocating its corporate headquarters.
The leasing uptick is encouraging in a state whose average unemployment rate hovers at just above the national average, according to a recently released UCLA Anderson report. The report says 2012 calls for employment growth in California of 1.8%, 1.6% and 2.4% in 2012, 2013 and 2014 respectively. Payrolls are expected to grow more steadily at 1.7%, 1.5% and 2.3% for the three forecast years, and the unemployment rate will hover around 10.7% through 2012 and average 9.8% throughout 2013. In 2014, the forecast says the state’s unemployment rate will drop to 8.5%, just shy of a percent higher than the national average.
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