Vacancies Shrink in One L.A. Submarket

SHERMAN OAKS, CA-GlobeSt.com has learned exclusively that the Los Angeles North office vacancy rate has been steadily improving, declining to 17% in the second quarter, and industrial leasing has also been active, according to Lee & Associates-L.A. North/Ventura. This is the latest in a substantial pattern of improvement since vacancy levels peaked at 19.5% in the third quarter of 2010.

The current quarter's office vacancy rate in the submarket is down by 10 basis points compared to the prior quarter and by 80 basis points compared to second-quarter 2012. Many of the concessions offered during the height of the recession have been eliminated, and average asking lease rates have risen $0.03 since last year to a current $2.24 per square foot.

“The uptick in leasing activity that we began to see about a year ago is now beginning to be reflected in the data,” says Mike Tingus, president of Lee's L.A. North/Ventura office. “Employment gains have admittedly been modest, but we are clearly seeing the economy come back.”

While it has remained relatively strong throughout the recession, the industrial sector continues to be hampered by a lack of product. Still, nearly 1.7 million square feet of industrial leases have been transacted since the beginning of the year, and the average asking lease rate rose $0.02 in the latest quarter to $0.61 per square foot, according to Lee.

“Our challenge in the Los Angeles North industrial market is that a lot of the space is no longer functional for today's manufacturing and warehousing needs,” says Tingus. “That said, demand is clearly strong and our vacancies have remained under 5% for some years now.”

As GlobeSt.com reported exclusively last week, Lee & Associates has hired Brad McCoy as director of the firm's community banking group in its West Los Angeles office. He will focus on advising and collaborating with community banks regarding their unique business goals and value-added distribution strategies for their retail, commercial and operational needs.