Vacancy in SaMo’s office market dropped nearly 5.6% in one quarter
The tail end of 2016 was ripe with Santa Monica office news, from Oracle’s purchase of 2700 Colorado to reports that Snapchat was looking to take a massive space at Santa Monica Business Park. Now, fourth quarter data is illuminating the full scope of the change in the submarket, where vacancy rates dropped to the lowest levels since 2015.
Demand from tech and media firms helped push vacancy down from 15.1 percent in the third quarter to 9.5 percent in the fourth quarter of last year, according to a report from CBRE.
The area saw a positive 537,513 square feet of net absorption in the fourth quarter. Meanwhile, with less than 1 million square feet of vacant space left in the city, rents increased, climbing 3.4 percent from the third quarter to the fourth quarter.
Rents are not likely, however, to see endless flight. Historically, when lease rates are more than 13.5 percent higher than the West Los Angeles average, absorption becomes negative over time.
But for now, Santa Monica’s office market is riding high. Developers have also taken notice with projects such as the two-building Colorado Creative Studios project at 2834 Colorado totaling 200,000 square feet of office space and Pen Factory at 2710 Olympic Boulevard offering 222,000 square feet of creative office space, The Real Deal reported.