There is cause for optimism in the Mid-Wilshire corridor office market, according to a space study by the Merritt Real Estate Group of a Los Angeles sub-market that has been characterized by an exodus of tenants to the San Gabriel and San Fernando valleys.
The corridor's vacancy rate declined from 24% in July, 1985 to 21% this month, and 320,000 square feet (net) of space was absorbed last year, according to Rick Merritt, vice president of the firm. He compiled statistics on 44 office buildings in the corridor, from Alvarado Street on the east to Highland Avenue on the west.
Despite the well-publicized exodus, there is still a "prestige factor" in a Wilshire Boulevard address, Merritt said, and law firms, advertising agencies, accounting firms and insurance concerns are taking advantage of rental rates that are considerably lower than those downtown or on the Westside.
In addition to the lower rents--more competitive than at any time in the past 10 years--tenants are attracted by less congestion, proximity to downtown and better parking, Merritt said.
"The Mid-Wilshire office market is a reflection of downtown activity," he added. "As rental rates firm up in downtown Los Angeles, we're anticipating an increase in net effective rents equal to 5% to 6% over the next 12 months, with an average of $21 reached within two years."