Cushman Realty Reports First Quarter Office Market Statistics.

Business Editors

LOS ANGELES--(BUSINESS WIRE)--April 3, 2001

Cushman Realty Corporation, an internationally recognized real estate brokerage and advisory firm, today reported first quarter market absorption and vacancy rates for downtown Los Angeles, West Los Angeles, Tri-Cities (Glendale, Pasadena, Burbank), the San Fernando Valley and Orange County.

According to Mitchell F. Russ, manager of real estate services for Cushman Realty Corporation's Los Angeles office, downtown LA led all submarkets with net absorption of 385,896 RSF in the first quarter. San Fernando Valley followed with net absorption of 1,546 RSF while Orange County experienced negative net absorption of 107,666 SF. The Tri-Cities area and West Los Angeles experienced negative net absorption of 400,368 SF and 1,114,981 RSF respectively.

Downtown LA's vacancy rate fell by 1.28% to 20.61% this quarter. Orange County vacancy increased by .30% to 11.50%. The vacancy level in the San Fernando Valley jumped by 3.43% to 15.40% due largely to the introduction of new office product to the market. The Tri-Cities area vacancy rate rose by 2.50% to 11.10% and West LA's vacancy rate grew by 2.70% to 11.10%.

"Downtown LA has bucked the regional trend with two consecutive quarters of net absorption," said Russ. "Ironically, a deceleration in the regional economy may benefit downtown LA as companies refocus on facility strategies that aggressively minimize occupancy costs. Also, current bargain rental rates for class A properties are driving the CBD recovery."

Noteworthy downtown lease transactions include Reliance Steel's sublease of 44,847 SF at Two Cal Plaza, 350 S. Grand Ave.; Weston Benshoof's sublease of 60,000 RSF at ARCO Center, 333 S. Hope Street; and ClickAction's lease of 12,960 SF in the Library Tower, 633 W. 5th Street.

In other parts of the region, absorption activity diminished.

"An excessive amount of direct and sublease space hit the region this quarter due to the consolidation of the hi-tech, media and dot.com industries such as MarchFirst, Stamps.com, Sapient, Sony and Focus Media. These companies dumped nearly 300,000 RSF in Santa Monica alone and E-Toys gave back approximately 150,000 RSF in West LA," said Russ.

Burbank was not immune to the pull back as the Warner Bros. Studio Stores Division space, 129,592 RSF, hit the market. In San Fernando Valley, vacancy grew due in large part to the introduction of new product, e.g. Westlake North Business Park, 30699 Russell Ranch Road (327,505 RSF). Likewise, in Orange County, Flashcom.com forfeited its 150,000 RSF lease at Park Place in the John Wayne Airport Area while Western Digital trimmed back approximately 101,000 RSF of its headquarters at 8105 Irvine Center Drive, Irvine.

In spite of the sudden supply of dot.com space, pre-leasing activity has been strong on the Westside. For example, International Lease Finance Corp. has pre-leased 127,000 SF at the (to be constructed) MGM Tower located at 10270 Constellation Place in Century City. This transaction comes on the heels of MGM's 400,000 RSF pre-lease commitment earlier last quarter. Currently the tower is 75% pre-leased. Further, Vivendi Universal signed a 99,144 RSF lease at the Howard Hughes Center located at 6060 Center Drive.

The growth in surplus of new office product did not deter leasing activity in the San Fernando Valley. The Guitar Center leased the former Dole Foods building (69,000 RSF) at 5795 Lindero Canyon Road, Westlake Village, and Blue Cross of California leased 47,000 RSF at Corporate Point in West Hills at 8433 Fallbrook Ave.

"Investors are still active with property acquisitions across the region, while institutional developers, such as Lennar Properties and Opus West, are forging ahead with the development of spec suburban office product," said Russ. "Our short to mid-term perspective on the region remains positive."

For more information, please visit our web site at www.cushmanrealty.com.

Headquartered in downtown Los Angeles, Cushman Realty Corporation is an internationally recognized real estate brokerage and advisory firm specializing in office leasing, investment services and consulting. Founded in 1978, the firm also maintains offices in West Los Angeles, Orange County, San Diego, San Francisco, Walnut Creek, Denver, Houston, Chicago, Washington D.C., and New York. The firm's corporate headquarters are located at 601 South Figueroa Street, 47th floor, Los Angeles, CA, 90017, 213/627-4700.