Few new office buildings completed in torpid Los Angeles market
With office rents and occupancy rates stuck in neutral, only nine new office buildings were completed in Los Angeles County in the first quarter.
The nine buildings contain a total of 140,000 square feet, a pittance by local standards. The U.S. Bank Tower in downtown Los Angeles, for instance, holds more than 1.4 million square feet.
More properties came on line in the fourth quarter of 2012, when 15 buildings with nearly 710,000 square feet were completed, real estate data provider CoStar Group said. That was still a drop in the bucket of the more than 424 million square feet existing in the county marketplace.
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Developers have been cautious about starting new projects in the Los Angeles area ever since a speculative office construction boom in the late 1980s and early 1990s ended with a massive oversupply of space when an economic downturn hit.
The largest office projects underway at the end of the latest quarter were the 545,000-square-foot George Deukmejian Courthouse in Long Beach and the 320,000-square-foot Torrance Memorial Medical Center. Both buildings are already leased.
Tenants who moved into large blocks of space this year include the Los Angeles Community Development Commission taking 130,000 square feet at the Gateway at Alhambra, clothier Nasty Gal moving into 53,000 square feet in the PacMutual building in downtown L.A. and telephone support operator VXI Global Solutions Inc. taking 51,500 square feet in the Los Angeles Times office complex downtown.
Office sales figures were not available for the first quarter, CoStar said. There were 54 sales of buildings larger than 15,000 square feet in the fourth quarter of 2012. They sold for more than $1.6 billion. That was an increase from 36 transactions totaling $892 million in the third quarter.
One of the largest office transactions in 2012 was the $422.5 million sale of Wilshire Courtyard to New York landlord and developer Tishman Speyer. The Los Angeles office complex on Wilshire Boulevard near the Los Angeles County Museum of Art has more than 1 million square feet of offices.
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