The Mid-Wilshire corridor, is alive and well and, according to a recently completed study by the Merritt Real Estate Group, its prestige factor remains intact.
In 1984, more than 700,000 square feet of space was leased between Highland Avenue on the west and Alvarado Street on the east, compared to the annual average of 400,000 to 500,000 for previous years.
The big change, however, is in the new tenant mix that appears to have infused new leasing strength into the area, Fred S. Merritt, Merritt Group's co-founder and president, said. He directed the study.
"What has changed primarily is the size of tenant firms," Merritt said. "Smaller service companies such as advertising agencies, accounting firms and insurance agencies are filling the void left by relocation of some of the larger corporations such as IBM, Arco and Countrywide Funding.
"This general trend involving smaller firms recognizes that the Wilshire address adds prestige to these businesses. In addition, they are drawn to the area by more reasonable rents and a location that is both central to downtown and the residential communities to the west."
Some new structures, either recently completed or under construction, also have increased the leasing potential of what is being referred to as the Park Mile (Western to Highland avenues), to distinguish it from other segments of Wilshire Boulevard that stretches 16 miles from One Wilshire at Grand Avenue downtown to the Pacific at Ocean Avenue in Santa Monica.
Such buildings as the Wilshire Serrano, Wilshire Normandie, Wilshire Fairfax, Fremont Plaza and 4221 Wilshire Building will add more than 1.1 million square feet, or 17%, to existing inventory.
The 4221 Wilshire Building is the newest office project in the Park Mile area, with nine tenants occupying more than 50% of office space, according to Search Builders Inc., the building's owner. The value of the leases thus far is about $10 million.
Official dedication of that building will take place Thursday. Some of the tenants include Blue Cross of California; California Business News Inc.; EAC Steamship Agencies; Deutsch, Shea & Evans; First Commercial Finance and Margolis, McTernan, Scope & Epstein.
Several office buildings along the Park Mile have been designed to harmonize with the residential character of the Hancock Park area. Developers have chosen long, horizontal buildings in preference to tall towers, and have stayed away from the urban high-tech design, choosing the warmer, suburban look of brick and other textures.
Depending on amenities, location and age of buildings, rents in the Mid-Wilshire area range from $13.20 to $24 per square foot per year.
Merritt predicted that over the next several years, during which the vacancy rate will decline to about 10%, rents will increase to an average of $22 per square foot per year. "Those would still be much lower than for the downtown area and the Beverly Hills-Century City area," he said.
Merritt discussed his company's major involvement in the Paramount Plaza, where more than 350,000 square feet have been leased in the past two years.
"Paramount Plaza is basically two 20-story buildings (3550-3580 Wilshire Blvd.) with a total of 862,000 square feet." he said. "Built in 1967 by Tishman, the Paramount Plaza property was later purchased by Equitable and is currently under management of the Paramount Group. We are the exclusive leasing agents of this property as well as the One Wilshire Building."
The Merritt Real Estate Group report showed that in 29 structures, the vacancy factor stands at about 24% or 1.9 million square feet available of a total of 7.7 million square feet.
"We are optimistic about mid-Wilshire," Merritt said, "but we are also aware of the keen competition which has prompted some projects to give up to 10 months of free rent with liberal improvement allowances. This should subside as the flow of new tenants closes the vacancy gap."