Entertainment Firms Boost Eastern Submarket

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Even with a potential Screen Actors Guild strike looming over the East San Fernando Valley, entertainment firms still accounted for the only bright spot in an otherwise drab second quarter in leasing and sales.

While vacancies in the region more than doubled since last year to 12.2 percent and the market gave back nearly 292,000 square feet as net absorption fell into the red, building owners weren’t willing to lower their rates.

Asking rents for Class A product across the Valley checked in at a robust $2.85 per square foot, boosted by even higher effective rental rates in the mid-$3 range in the entertainment-heavy East Valley, according to Grubb & Ellis Co.

“Once the writers’ strike ended, we had a definite uptick in activity that seemed mostly immune to what’s going on with the mortgage fallout and the overall economy” observed Trevor Belden, principal with Lee & Associates in Sherman Oaks. “An actors’ strike would change all that. But in areas like Studio City and Sherman Oaks, we’re actually seeing rates go up, and vacant space being leased as soon as it hits the market.”

Perennial Valley buyer Dr. David Lee, principal of Jamison Properties Inc., snatched up yet another Class A site, at 5161 Lankershim Blvd. in North Hollywood. Seller Arden Realty Inc. received $52 million for the 181,757-square-foot parcel.

Leasing brokers also reported a slew of Westside tenants coming over the hill to kick tires, with Class A asking rents in Santa Monica running about $6 per foot versus $2.89 in the Encino-Sherman Oaks corridor.


Office Market at a Glance

Inventory: 27.8 million square feet

Under Construction: 347,864 square feet

Class A Asking Rents: $2.85



MAIN EVENTS

– Dr. David Lee, principal of L.A.-based Jamison Properties Inc., snatched up another Class A office building in the east San Fernando Valley. The seller, Arden Realty Inc., received $52 million for the 181,757-square-foot building at 5161 Lankershim Blvd. in North Hollywood. The price of $286 per foot falls well short of top sales prices for other Class A Valley properties. The building is home to the Walt Disney Internet Group.

– Sources said CBS Television was close to coming to terms for more than 13,000 square feet at 11846 Ventura Blvd. in Studio City. The deal with landlord JSBC LLC was pegged at five years and valued at $2.6 million. Since the building last traded hands, in first quarter 2003, overall rental rates at the site have increased by 50 percent.

– 11565 Laurel Canyon Blvd. in Mission Hills, a Class B-C site that is 84 percent leased, sold for roughly $4 million to Le Rual Venture LP and Asset Management Consultants. The seller of the 20, 478-square-foot site was Diversified Lending Group Inc. for Michael Russo & Russo FT. Adjacent to Holy Cross Hospital, sources said the buyer was enticed by the building’s prime location for health-related administrative tenants.

– Trilogy Studios Inc. signed a five-year lease for more than 8,000 square feet at 5990 Sepulveda Blvd. in Van Nuys. Consideration with landlord Tri-Center Plaza LP (Jamison Properties) was put at more than $1.2 million. The company is one of the premiere designers of online virtual worlds and gaming consoles.

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