The Industry Council is a series of monthly meetings held by the Santa Monica Chamber of Commerce, to identify common challenges and solutions different industries that contribute to the local economy. These informal meetings are hosted by members of the Chamber’s Business Roundtable, an influential cross-section of decision-makers in Santa Monica.
This month’s Industry Council focusing on commercial and industrial real estate, was held at Jonathan Beach Club on January 15 and was hosted by John Bohn, former City Councilmember and president of Equity Associates Inc. and other companies. Joseph Gabbaian, senior vice president of Grubb & Ellis, presented an update on the availability and pricing conditions for the Westside region. Looking toward Santa Monica’s future specifically, Carl Muhlstein, Cushman and Wakefieldexecutive vice president, led a discussion on the impact of the LUCE revisions to the Santa Monica General Plan.
As the more than 30 professionals took their seats with a lovely view looking out over the Pacific coastline, Gabbaian began the meeting by presenting an overview of the past and current state of real estate.
“It almost looks like we’re where we were in 2001,” said Gabbaian at one point, remarking on the Class A office market asking rates, one example of which would be $4 per square foot at 100 Wilshire Boulevard. “We’ve lost 10 years worth of growth. ing rates are meaningless these days.”
In the last year, 4.8 million square feet of office space was vacated in Los Angeles County, which increased the vacancy rate.
Not all was dismal though. Gabbaian then ended with a somewhat positive lookout to the future of the market, saying that the market will reach it’s bottom in 2010, if it hasn’t already begun to recover.
A sign of this, Gabbaian noted in his Fourth Quarter Office Trends Report, is that larger leases with longer terms are being signed by those taking advantage of the opportunistic rates.
Another positive sign that both Gabbaian and Muhlstein noted is that the majority of leases being signed are renewals, which is an indicator of stabilization.
“A lot of tenants simply don’t want to get up and move,” Muhlstein said. “A lot of leasing right now is renewals.”
Muhlstein predicted this to continue in 2010, as well as increasing vacancy rates and a continued decline in asking rates. Gabbaian predicted rents in Class A properties to drop 5-10 percent.
Muhlstein said that one thing statistics ignore are the millions of square feet of creative office space.
Muhlstein also cautioned that Santa Monica needs to find ways to continue to look attractive to businesses as rates in surrounding areas, such as Playa Vista, Culver City and to some extent Westwood, become more competitive.
“It is important to Santa Monica to realize what competitive businesses face from adjacent areas,” said host, John Bohn.
In the end, Bohn said he was pleased with the attendance and with the discussion among the attendees.
“I hope it was beneficial to those who attended and that it helps the future of Santa Monica.”
Comments on the subjects discussed at Industry Council meetings are welcomed by the Chamber of Commerce, and would be of benefit to the entire community as well as the industry involved. Letters to the Editor at the Mirror and online comments posted to the article on the newspaper’s online edition will be forwarded to the Chamber.