Office vacancy ticks up in tony Century City

Century City has stood out as an exception in L.A.’s struggling office market. 

But the upscale district that recently drew such tenants as Sidley Austin and Creative Artists Agency saw its office vacancy rate rise 18.6 percent year-over-year in the fourth quarter, L.A. Business First reported, citing a report by NAI Capital.

In the final three months of last year, Century City’s office vacancy was 14.5 percent, with a combined 1.4 million square feet of empty cubicles.

The numbers are a sign of tenants’ resilient flight to quality, NAI Capital Commercial Executive Vice President Michael Arnold told Business First. He called the market an “anomaly” compared with the rest of L.A.

Arnold, founder of the firm’s Tenant Consulting Group, said office occupants are seeking opportunities as they evaluate their real estate footprints — and rightsize to make sure they’re using space most effectively.

“The reason we’re seeing so much activity in trophy and Class A is because people like to be in a nicer office,” he told L.A. Business First. “If they’re going to be in there, [they want to] be in a space that actually works more effectively or efficiently for their company.”

He said most of the empty offices in Century City are in Class B, or older buildings. 

As rents continue to rise across the board, Arnold said, vacancies in trophy and Class A offices will experience a consistent decline as firms decide to invest in nicer towers.

“Everything is so high right now that people are asking if it’s worth it to be in a nicer building and pay the higher rates in today’s market, or to wait to see how the election goes and the market is going to be next year,” Arnold told the newspaper.

“People are relocating in Century City specifically and going to nicer buildings, so you’re looking at big rental rate numbers to justify new construction.”

Landlords have remained firm on price, driving the average asking rent up by more than 4 percent year-over-year to $5.93 per square foot in the fourth quarter, according to NAI Capital. For subleases, the average asking rent has risen 28 percent year-over-year to $5.78 per square foot per month.

— Dana Bartholomew

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