Sublets by Exiting Dot-Coms Having Trickle-Down Effect on Rents and Vacancy Rates

LOS ANGELES-Rents on LA’s pricey Westside–home to numerous dot-coms, entertainment and high-tech tenants–are likely to stabilize as a result of cutbacks and failures by dot-coms, according to Rick Buckley, senior managing director at Insignia ESG’s West Los Angeles office.

He says that’s because exiting dot-coms are dumping sublet space back on the market, creating increased competition for building owners. Buckley notes that the turn in the market has pushed the actual vacancy rate from 7.2% to 9.95%, when sublet space is added to the equation.

According to Buckley, one million sf of space is currently available on the Westside, which includes Santa Monica, West Los Angeles and Venice. The good news, he says is that “this is a bonus for tenants looking in the market today, because there’s more alternatives to choose from.” Additionally, space formerly occupied by dot-coms is creative space–exposed ceilings and concrete floors–and most current market activity involves professionals looking for built-out office space. “These are ‘real tenants’ that are credit worthy,” Buckley adds, “the type any landlord would be happy to have.”