Vacancy Rate

More leasing and more vacancies went together in the Orange County office market during the first three months of this year, according to a study by Grubb & Ellis Commercial Brokerage Services. New leases during the first quarter surpassed 1 million square feet, which could lead to a new annual record if the current pace continues. At the same time, the first-quarter vacancy rate jumped to 25%.

Office vacancy in Los Angeles County decreased in the fourth quarter in the first year-over-year drop since the economic boom year of 2006. The drop in vacancy to 18.4% was barely measurable at less than half of 1 percentage point, but it's a further sign that the office rental market has reached an even keel and is poised for modest improvement, industry observers said. "We are at the point where we want to be. We are stabilized and going in the right direction," said Joe Vargas, regional manager of real estate brokerage Cushman & Wakefield.

Finding an apartment in Orange County isn't getting any easier. A new report by Marcus & Millichap, a brokerage in Newport Beach, predicts that that vacancy rate will be slightly below the minuscule 2.9% rate last year. Average apartment rents rose 8% last year to $1,050, according to the report. And landlords, with waiting lists in hand, figure to demand higher rents this year.

Southern California's long-languishing office market finally managed to utter a convincing peep in the second quarter as stubbornly high vacancy rates dropped a smidgen. It doesn't signal that landlords' troubles are nearly over. Most markets - with a few notable exceptions - are considered quite soft, which means tenants are in a superior bargaining position. Still, overall vacancy in Los Angeles County slipped to 18.6% from 19.1% in last year's second quarter, according to real estate brokerage Cushman & Wakefield.

Data assembled by the city of Los Angeles shows a lower vacancy rate for homes on the Westside than the U.S. Census Bureau found in its 10-year head-count last April. Different counting methods may be one reason for the discrepancy, but it may also mean that the census missed several thousand residents, said Greg Lipton, a demographer for the city's Community Development Department.

The percentage of vacant housing units in Orange County has increased slightly, moving from 5.46% in January, 1990, to 5.56% in January, 1991. There is a strong regional aspect to the latest figures, with five South County cities topping the 1991 list. Laguna Beach has the highest rate this year; La Palma the lowest. Bucking the overall change, 18 cities recorded drops in vacancy, led by the 1.58% decrease in Dana Point. That change allowed Dana Point to drop from No.

Despite last year's brisk rate of construction, housing vacancies in Orange County remained low through mid-1986, showing that the area remains highly attractive to both home buyers and renters. A survey by the Federal Home Loan Bank of San Francisco in May found that only 2% of the homes and apartments in the county were vacant, virtually unchanged from the 2.1% vacancy rate found in May, 1985. The vacancy rate for multifamily housing, including apartments and condominiums, increased to 3.

Ventura County's office vacancy rate dipped slightly in the third quarter, but industrial and retail vacancies rose. The latest office rate, 22.6%, compares to 22.7% in the second quarter and 24.9% a year ago, according to a study by the Oxnard office of Grubb & Ellis Commercial Real Estate Services. Industrial vacancies amounted to 12.7% in the latest quarter, up from 12.5% in the previous three months but below the 15% of the third quarter of 1992. Retail vacancies stood at 9.

The vacancy rate for commercial office space in Glendale fell 2 percentage points, to 10%, in the three months ended Sept. 30, according to a report by Grubb & Ellis Commercial Real Estate Services. Since the beginning of the year, the vacancy rate in Glendale has fallen more than 4 points, the report stated. More office space was leased in the area this year than in the three previous years combined, it said.

The vacancy rate for San Fernando Valley office space inched up to 21% by the end of the second quarter, according to the latest study by the realty firm of Grubb & Ellis. At the end of the first quarter the rate was 20%, and a year earlier it was 14%, the firm reported. The study found that 3.2 million square feet were vacant, of a total inventory of 15.4 million square feet. One reason for the higher vacancy rate was a slackening of leasing activity.

The industrial real estate market in the Inland Empire's east valley, where many international companies have distribution hubs, is in full recovery, real estate brokers said. “Uncertainty that may have existed in the first quarter of 2012 seems to have dissipated in the second quarter of the year,” a report by the Riverside office of brokerage Lee & Associates said. Leasing activity and absorption of empty space were strong in the second quarter, the brokerage said, indicating that the market is continuing to stabilize, and positive absorption is expected to continue throughout 2012.

Compared with most of the region's white-collar office market, the less corporate environs of Santa Monica and Venice are looking sharp. Technology and entertainment companies that long ago mastered the knack of making money without dressing up are now paying top dollar to rent space in some of Southern California's most desirable neighborhoods. The office vacancy rate in downtown Santa Monica is a mere 4%, a fraction of the county average, said real estate broker Craig Kish of Jones Lang LaSalle.

In a sign that the nation's foreclosure crisis is taking a toll, renters surged into the U.S. apartment market in the third quarter, pushing up rents and driving down vacancies. The national vacancy rate fell to 7.2% in the third quarter from 7.8% the second quarter, one of the sharpest drops on record, according to New York-based real estate research firm Reis Inc. Rents increased 0.6% to an average of $980 a unit over the same period as landlords were able to cut back on free rent and other incentives that had been used to attract and retain tenants in a weak market.

For some, construction kicked off during better years, when office rentals in prime locales seemed a sure shot for developers. Others are older, once bustling but now deserted after hemorrhaging tenants during the economic downturn. But one way or another, they are among the emptiest office buildings in Southern California. A number of the highest- vacancy buildings are in Burbank and Glendale, according to data from CoStar Group Inc. The real estate research firm looked at the percentage of space that was rented out at Class A office buildings with 300,000 square feet or more.

On a recent bright afternoon in Redondo Beach, rent signs baked in the sun outside half the small stucco apartment buildings along the stretch of Beryl Street between Flagler and Harkness lanes. "I've never seen it this saturated with rentals," said property manager Vickie Callahan, who owns a three-unit and a four-unit building in the area. "It's very scary." It's a scene playing out across the Southland.

In the heart of affluent Studio City, "for lease" signs dot the Ventura Boulevard shopping district, and cars zoom past vacant storefronts. "This was the main drag historically," said Lynn Crandall, who owns an art sales and picture-framing business on Ventura near Laurel Canyon Boulevard. "Now it's become like a ghost town."

Layoffs, tight credit and other fallout from the troubled economy have battered Southern California's office market, leading to vacancy rates as high as 30% in some areas. The pain is expected to continue for months, if not years, with vacancies rising even as the economy shows modest signs of recovery, according to industry observers tracking activity in the first quarter. "We have a rough road ahead of us," said Joe Vargas, senior managing director of real estate brokerage Cushman & Wakefield.

Los Angeles office landlords will probably be forced to slash rents as much as 30% in the first half of the year as job cuts create more empty space, Grubb & Ellis Co. said Wednesday. Office vacancy rates in Los Angeles County jumped to 12.2% at the end of 2008 from 9.7% a year earlier, the Santa Ana broker said. "Southern California counties got caught in the economic whirlwinds of 2008, and there will be little or no letup in 2009," said Jack Kyser, an economist who worked on the report.