Office Vacancy Rates Decline in 1st Quarter

The office vacancy rate in the San Fernando, Conejo and Santa Clarita valleys declined in the first quarter, but average rental rates continued to soften.

The rate of empty offices in the region fell to 15.9% in the first three months of 1993, according to a survey by commercial real estate broker Grubb & Ellis. A year earlier, the corresponding rate was 16.8% and in the fourth quarter of 1992 it was 16.4%.

The Valley area also compared favorably to Los Angeles County as a whole, which had a 19.5% office vacancy rate in the first quarter.

The tightest office market in the region was in the East Valley, which had a 7.4% vacancy rate in the first quarter. That area has benefited from growth in the entertainment industry.

The highest regional vacancy rate was in the Conejo Valley, where 22.1% of the buildings were empty in the first quarter.

Howe Foster, Grubb & Ellis’ district manager in Sherman Oaks, said that vacancy rates tend to be lower and rental rates stable at the newer, “class A” buildings. Many older buildings, however, have low occupancy levels and rents continue to fall.

“My sense is we might not have dramatically improving conditions here, but we will get some improvement over time that will eventually result in shortages of space,” Foster said. “The question is, how much time?”