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Survey: Vacancy Levels for Office Space Stable

November 12, 1987|CARLOS V. LOZANO | Times Staff Writer

Despite the addition of half a million square feet of office space on the Westside, the vacancy rate in the third quarter of 1987 remained at 12%, the lowest of any market in Southern California.

According to a recent survey by Grubb & Ellis Commercial Brokerage Services, about 4.1 million square feet of office space remained vacant out of a total of 35.4 million.

Century City at 7% and Westwood at 9% reported the least amount of available office space, with West Los Angeles and Beverly Hills following close behind. Of the nine Westside areas included in the survey, Miracle Mile had the highest vacancy rate at 17%.

Inflated Figures

Although leasing activity is high, the amount of new office space rented for the first nine months of 1987 was the lowest it has been in two years, according to the survey.

However, Susan Meyer, research director for the Grubb & Ellis' Westside office, said the amount of new office space rented for the previous two years was inflated by tenants who rented more space than they needed.

Meyer said tenants rented additional space in anticipation of future growth. They took advantage of generous concessions being offered by landlords, such as free rent for one and in some cases as much as two years.

Because of economic conditions and the decline in the number of free rent offers, she said, tenants are now being more cautious, renting only space they can use.

The report stated that the high demand for office space comes mostly from within the Westside market where tenants of older buildings are moving into newer structures offering competitive rates.

No Sight of Trend

Harvey Mahler, senior vice president of Tischman West Management Corp., disagreed.

"I don't see a trend that everybody wants a new building. I don't see a trend either way," said Mahler, whose company manages both old and new office buildings on the Westside.

"People move for whatever reasons. It's not always price. Maybe they're fed up with Century City for the traffic . . . so they say, 'Let's look somewhere else.' "

Mahler said of the six buildings he manages on the Westside, nearly 93% of office space is leased.

John Carpenter, vice president and district manager for Grubb & Ellis, said that vacancy rates are expected to decrease and that in order to keep up with new developers, owners of older buildings will have to initiate different marketing strategies to attract tenants.

Proposition U, which last year set limits on the size of most new commercial developments in Los Angeles, has had some effect on projects planned for the Westside, he said.

"The demands are still there," Carpenter said. "It doesn't stop people from building. But the projects are smaller."

Carpenter said of 3.8 million square feet under construction, 1 million has been preleased.

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