Office Vacancies Decline in Valley

Vacant offices became a bit scarcer in the San Fernando Valley region during the first quarter, in contrast to a national trend of increased office availability in downtown markets, according to separate studies by two commercial real estate firms.

One firm, Cushman & Wakefield, said the combined office-vacancy rate for the San Fernando, Conejo and Santa Clarita valleys fell to 20.2% of total office space from 21.2% in the fourth quarter of 1987, based on its survey of 530 buildings in the area that are 10,000 square feet or larger.

The other firm, Grubb & Ellis, said the vacancy rate in only the San Fernando and Conejo valleys fell to 12% in the first quarter from 14% in the preceding three months.

Grubb & Ellis, which surveys 240 buildings 20,000 square feet or larger, said its vacancy measure also is down sharply from 18% in the first quarter of 1987. The firm’s survey does not measure office space in the Santa Clarita Valley.

By comparison, the national office vacancy rate for cities’ central business districts climbed to 15.1% in the latest quarter--its highest level in more than a year--from 13.8% in the final three months of last year, Cushman & Wakefield said. However, the national rate for suburban markets slipped to 21.9% from 22.2%.

Despite the latest decline in the vacancy rate in the San Fernando Valley, office space in the region remains ample in comparison to downtown Los Angeles. There, the vacancy rate edged down to 14% in the first quarter from 14.2%, mainly because no new office buildings were added to the area’s existing office space of 21.2 million square feet, said Cushman & Wakefield, a unit of New York’s Rockefeller Group.

Office construction also was limited in the San Fernando Valley region during the latest quarter, which, together with steady leasing demand, led to the drop in the area’s vacancy rate.

Nearly 500,000 square feet of office space were added to the region’s 28.5 million square feet of existing office space in the latest quarter, and about 200,000 square feet were leased during the period, Cushman & Wakefield said.

The biggest first-quarter drop in vacancy rates among Valley communities occurred in Van Nuys, where the rate fell to 17.7% from 23.5%. Van Nuys is becoming more attractive to commercial tenants because rents generally are lower than in surrounding communities, the firm said.

“New buildings in Van Nuys are leasing up quickly as parking rates and rents escalate in neighboring Encino and Sherman Oaks,� Bruce Arden, manager of the north Los Angeles branch of Cushman & Wakefield, said in a statement.

Available office space also fell markedly in Burbank, to 16.3% in the first quarter from 19.3% in the fourth quarter of 1987. It also decreased in Calabasas to 13.6% from 15.9%.

But in Warner Center in Woodland Hills, where 213,502 square feet of office space were added in the first quarter, the rate climbed to 17.9% from 14.9%, the firm said.