Asking rents for office space in Santa Monica increased 22 percent over the last year, the largest increase of any market on the Westside, and, at $4.34 per square foot for Class A space, the level of Santa Monica rents is also the highest in the area. These findings were among the information announced by Grubb & Ellis Company at the Fifth Annual Westside Economic Summit on Friday, November 17, at the RAND Corporation Headquarters on Main Street.
The gathering was sponsored by the Westside Economic Collaborative (WEC), a regional consortium of business, community, not-for-profit, governmental and educational leaders serving the six cities (Beverly Hills, Culver City, Malibu, Santa Monica, West Hollywood and parts of Los Angeles) and parts of unincorporated Los Angeles County generally known as the Westside.
The Grubb & Ellis survey of the Westside office market indicated that demand is outpacing supply throughout the Westside, and the 7.1 percent vacancy rate as of the third quarter of 2006 is approaching the lowest vacancy rate on record (5.8 percent achieved in 2000). The real estate brokerage firm’s forecast is that demand for office space will remain strong, rents will continue to rise and the demand for new development is growing.
The other principal presentation of the morning conference examined the positive aspects of mixed-use developments, in which residential, office and retail/commercial uses are combined in one building or project. “We need housing where people work,” said panel moderator Steve Soboroff, President of Playa Vista. He argued that intolerable traffic was the natural result of the fact that there are five people employed on the Westside for every home on the Westside. Directing his attention to Santa Monica at one point, he said, “They build five million square feet of office space in the last 10 years and [add] not one housing unit, and they sue Playa Vista,” referring to a lawsuit filed by the City against the development on what had been the Hughes Aircraft property in the City of Los Angeles.
Joining Soboroff on the panel were: S. Gail Goldberg, Director of the Los Angeles City Planning Department; Robert Champion, President of builder/developer Champion Development Group; and Larry Green, Senior Vice President of Development West Coast for shopping center company Westfield. Each discussed his/her experience with real estate projects that increased residential density close to employment centers and thereby reduced traffic, as well as the difficulties such projects could encounter from local governments whose citizens were opposed to growth.
The panel was entitled “If You Build It, Will They Come?” Soboroff appeared to speak for the other panelists when he said, “If you build it and you follow good public policy, they will come – but you have to get the entitlements from the cities.”
Santa Monica Mayor Bob Holbrook and Rand representative Iao Katagiri welcomed WEC members as the conference began. WEC Executive Director Jason Weiner explained that WEC is an affiliate of the Los Angeles County Economic Development Corporation (LAEDC) and reported on WEC’s efforts in Westside business attraction and retention, layoff aversion outreach and transportation initiatives. Beverly Hills City Councilmember Linda Briskman reviewed the work of the Westside Cities Council of Governments, of which Santa Monica City Councilmember Richard Bloom is chair.