Southern California Office Real Estate Blog

Los Angeles Area Office Vacancy Rates Up in Q2

Los Angeles Area Office Vacancy Rates Up in Q2

Grubb & Ellis Research Services  have released office market vacancy rates for second quarter 2008.  The numbers were up across the board and reflected the gloomy economic environment in the region.

Mounting job losses in office-space-using activities – particularly finance and mortgage-related companies – have boosted office vacancy rates around Southern California.  The office vacancy rate in Los Angeles County during the second quarter of 2008 was 10.7%, up slightly from first quarter 2008 vacancy rate of 10.1% and from the comparable period a year ago of 9.5%.  This was the third quarter in a row that L.A. County’s office vacancy rate edged higher.  Orange County’s second quarter office vacancy rate increased to 15.2% from 14.9% the previous quarter and from 9.0% the same period a year ago.  The Riverside-San Bernardino area second quarter office vacancy rate shot up to 17.5% from 14.6% the previous quarter and from 9.3% the same period in 2007.  San Diego County’s office vacancy rate increased to 14.1%, up from 12.8% the previous quarter and from 10.9% in second quarter 2007.  (Candice Flor Hynek) 

PR: http://grubb-ellis.com/Research/Reports.aspx

http://laedc.org/eedge/index.html#4

CAN IT BE GREEN TO RECYCLE BUILDING MATERIALS?

CAN IT BE GREEN TO RECYCLE BUILDING MATERIALS?

“People love to live in old buildings,” observes Susan Powers, president of the development company Urban Ventures. ”Community members generally love to see old buildings restored.”

Here’s a green building snafu - many current building codes aren’t formulated to accommodate the reuse of salvaged materials. As a matter of public policy, many progressive cities encourage the recycling of building materials, yet as a matter of administrative practice they make their use either economically impractical or illegal.

“In the case of windows, plumbing fixtures and lighting fixtures, energy-efficiency standards all but mandate the use of brand-new materials, since few salvaged materials can comply,” notes real estate columnist Arrol Gellner. “The majority of salvaged windows, for example, are single-glazed and don’t meet modern requirements for thermal efficiency or air infiltration — shortcomings that usually can’t be remedied without spending more than an old window is worth.”

Simple examples of the green building / historic rehab snafu:

Modern codes require safety glazing in all glass doors and in many windows. Yet the overwhelming majority of glass doors gleaned from architectural salvage, along with most of the windows, have plain glass, which cannot comply with these requirements. Calculate in the cost of re-glazing, say, a pair of old French doors with code-compliant glass would typically far outstrip their value. Factor in lead paint and asbestos issues.  When it all comes down to it, it’s just easier to get them from your local home supply megastore.

Obviously old plumbing + electrical fixtures are out of the question. (Some antique models use as many as eight gallons per flush, as opposed to the currently mandated 1.6 gallons). Antique faucets on vintage sinks don’t have the flow restrictors mandated by modern energy codes. In many cities, newly installed lighting fixtures are required to carry an Underwriters Laboratories label — a standard that many old fixtures, even those rewired with modern components for safety, cannot meet.

In the current climate, achieving compliance in construction usually means replacing the old fixtures with more efficient ones.

Should green building ordinance makers need to look beyond the obvious, and make some allowances for certain types of recycled home materials?

Wade Killefer, a principal with Los Angeles-based Killefer Flammang Architects, has worked on many building rehab projects in downtown Los Angeles. He has identified several social and environmental benefits to historical rehab projects, including:

o    Conservation of natural resources

o    Repopulation of cities, which helps create sustainable communities

o    Minimizing waste/keeping debris out of landfills

o    Minimizing transportation costs for new materials

o    Reduced heating and cooling loads in rehabs of old concrete and masonry buildings

o    Increased cultural pride

o    Shared resources/lower per-capita energy use

o    Increased use of/demand for mass transit.

 “One way to acknowledge the reuse of old materials as an alternate and equally valid way of saving energy would be for city building departments to grant ‘green credits’ to people using salvaged building materials,” observes Gellner. These could be used to offset certain code-compliance shortcomings, especially those dealing with energy efficiency.

Perhaps a simple approach may be to grandfather in various kinds of salvaged items, just as the noncompliant windows and lighting found in the vast majority of houses across the nation are deemed acceptable because they were legal when they were installed.

**

http://www.inman.com/buyers-sellers/columnists/arrolgellner/green-credits-would-help-recycling-efforts

http://www.inman.com/buyers-sellers/columnists/arrolgellner/double-standards-hamper-green-building

http://www.socalgreenrealestateblog.com/?p=126

INDUSTRIAL + OFFICE CONDO COMPLEX BREAKS GROUND IN MOORPARK

INDUSTRIAL + OFFICE CONDO COMPLEX BREAKS GROUND IN MOORPARK

We are a big fan of the business condo complex so kudos to the groundbreaking of the Patriot Commerce in Moorpark. The center will feature 306,000 sf of class A industrial and office space on a 20-acre site near the 23 and 118 freeways. The Patriot Commerce offers business park in n area where very few properties of this kind available for sale.

Experts note that the vacancy rate is 2% in the submarket, and land availability is limited.

Built by Ossola & Associates Inc. of Calabasas, the $60 million in construction and mezzanine financing is being provided by Pacific National Bank and Hillwood.
Ossola & Associates anticipates delivery of the new space beginning in the fourth quarter of this year and continuing through the second quarter of 2009.

Information courtesy of

http://www.cityfeet.com/News/NewsArticle.aspx?Id=29435

http://www.globest.com/news/1160_1160/losangeles/170870-1.html?sector=industrial

IRS Increases Mileage Rates through Dec. 31, 2008

IRS Increases Mileage Rates through Dec. 31, 2008

The Internal Revenue Service has announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six months of 2008, as set forth in Rev. Proc. 2007-70.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile,” said IRS Commissioner Doug Shulman. “We want the reimbursement rate to be fair to taxpayers.”

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by eight (8) cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2008-63 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Mileage Rate Changes

Rates 7/1 through 12/31/08

Purpose: Business
58.5

Purpose: Medical/Moving
27

Purpose: Charitable
14

Source: http://www.irs.gov/newsroom/article/0,,id=184163,00.html
IR-2008-82, June 23, 2008

Top 5 Actions to Green Your Business

Top 5 Actions to Green Your Business
by Susy Borlido Holyhead
Account Director, BGP

1. TURN IT OFF. Use Natural Daylight via windows/skylights when available. Turn off equipment, lights, appliances etc. when not in use. Set lights on timers to turn ‘ON/ OFF’ via business hours or implement an ‘opening and closing’ policy company-wide.
2. Implement a company wide environmentally-friendly purchasing policy that ranges from office products to janitorial supplies. Ensure that all paper products are chlorine-free and contain 30-100% post-consumer content recycled materials.
3. Use green, less toxic cleaning chemicals. A great resource for this is www.greenseal.org. They list cleaning chemicals that are green certified by a 3rd party non-profit group. You can find effective green cleaning chemicals.
4. REDUCE, REUSE, RECYCLE. Stocking employee kitchens with reusable dishes, mugs and silverware can save thousands of dollars a year! When you compare the costs of continuously having to stock disposables - and then hauling the trash away - to purchasing one set of reusables, the answer is obvious. Purchase condiments like sugar and cream in bulk. You can divert over 80% of trash by composting your food waste and recycling cans, plastic, glass, mixed paper. Hauling recyclables costs less than hauling trash.

Dispose of electronic and hazardous waste properly. It’s a California state law that these items must not end up in the trash. Electronic waste includes unwanted computer equipment, cell phones and anything with a plug. Hazardous waste includes batteries, fluorescent lights and paints. Contact your local City Waste Division for more details and for disposal procedures - for Los Angeles area, you can drop off electronic items for free at www.californiarecycles.com

http://www.sustainableworks.org/

Office Rents Flatten, Vacancies Creep Up

Office Rents Flatten, Vacancies Creep Up

Rents for U.S. office space have stalled, rising 0.7 percent in the second quarter to $25.16 a square foot, according to real estate research firm Reis.

At an annualized rate, rents are growing just 2.9 percent, a fraction of the 10.6 percent seen last year. The vacancy rate rose slightly, up 0.2 percent to 13 percent, the highest rate in more than a year.

Although the weakening rental rates and rising vacancies are modest compared with the downturn after the dot.com bust, Reis sees the trend as problematic.

With inflation running roughly 1 percent a quarter, rent growth is effectively wiped out. “Landlords are having to concede ground on rents and tenant improvements,” says Sam Chandan, Reis’s chief economist. “The balance is tipping in the favor of tenants in many markets.”

Source: Reuters News, Ilaina Jones

http://www.realtor.org/RMODaily.nsf/pages/News2008070305?OpenDocument

FOX INTERACTIVE LEASES LOTS O’ GOLD OFFICE SPACE IN PLAYA VISTA

FOX INTERACTIVE LEASES LOTS O’ GOLD OFFICE SPACE IN PLAYA VISTA

Rumored $350M for 421,000-SF HQ Lease

Fox Interactive Media has signed a lease for 421,000 sf of office space at the Horizon at Playa Vista project at the intersection of Bluff Creek Drive and Campus Center Drive, in the eastern portion of the mixed-use Playa Vista development.

The first phase of Horizon project consists of two, five-story buildings surrounded by pedestrian pathways and open courtyards. The campus, designed by Johnson Fain, and  developed by Lincoln Property Co. and ASB Real Estate will be seeking Gold LEED certification.

Fox Interactive will occupy virtually all of the square footage in the first phase of the new 15-acre, creative-style office campus that will ultimately include nearly one million sf of office space. Fox Interactive will consolidate its Los Angeles facilities, currently housing companies including MySpace, Fox Sports Interactive and Rotten Tomatoes. The move will relocate more than 2,000 of the company’s employees onto the campus by June 2009.

Terms of the deal were not disclosed, but industry sources peg the 12-year lease in the range of $350 million.

The Fox Interactive lease marks the second noteworthy 2Q lease at the Playa Vista project. Los Angeles-based electronics firm Belkin International recently signed for 150,000 sf of office space for a new headquarters, where the first phase of construction is slated to be completed in late 2009. Tishman Speyer is constructing 325,000-sf, four-building first phase of its 1.6-million-sf, 64-acre Campus at Playa Vista, as a joint venture with Walton Street Capital LLC.

David Binswanger, executive vice president at  Lincoln Property Co., noted that the Fox Interactive lease as indications of the “tremendous demand for class A office space on the Westside of Los Angeles.”

As a result of this deal, Lincoln and ASB will move forward immediately on the second phase of Horizon, which will total nearly 350,000 sf.

**

Original article @

http://www.globest.com/news/1191_1191/losangeles/172017-1.html

 http://www.socalofficerealestateblog.com/?p=224