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RENTAL RATES EASE OFF RECORD HIGHS
Weak economic conditions and continued high rental rates caused demand for office space in West Los Angeles to slow further in Q2 2008. Net absorption was negative -232,000 SF, while vacancy climbed 0.5% to end the quarter at 9.1%. Average asking rates posted their first quarterly decline since 2004, but are still up 13.9% over the past year. Construction activity was up, notably Tishman Speyer began construction of Campus at Playa Vista – Phase 1 upon securing Belkin International as an anchor tenant.
As weakness in the economy persists and new construction comes on-line in the second half of 2008 it is likely that vacancy rates will continue to climb slightly, perhaps reaching 10% by year-end. As with last quarter, we continue to see a slight shift in the market from one that favors landlords to one more balanced between tenant and landlord needs. Free rent and beneficial occupancy have become increasingly common as landlords attempt to keep and attract tenants while maintaining higher face rents. While conditions have softened, vacancy remains within the 8% to 11% range considered “healthy”.
Contact Michael Gold at 213.532.3247 for more information.
  OFFWLA08Q2.pdf
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