Emmett sets new benchmark with Comerica Bank Rent.

THE San Fernando Valley' office market remained one of the tightest in all of L.A. County in the third quarter. Supply lagged well behind demand, and tenant improvement costs continued to soar, egging on landlord confidence.

Although expected, the impact was still widespread. Class A asking rents climbed by a nickel in the west and east Valley to $2.36 and $2.85 respectively, according to Grubb & Ellis Co. The central Valley saw an even bigger spike in Class A asking rents, moving up 16 cents to $2.49.

The Valley's largest office owner, Douglas Emmett Inc., set a new benchmark with asking rents of $3.10 per square foot full service gross at the Comerica Bank Building, 15303 Ventura Blvd. in Sherman Oaks. Experts weren't clear how the jump would impact the rest of the market. But most everyone agreed Valley landlords were firmly in the driver's seat.

"I don't think we'll see rates hit $3.25 up and down Ventura Boulevard," said John La Spada of CB Richard Ellis Group Inc. in Universal City. "But using Comerica as a nucleus, it's reasonable to think Class A product in that area will continue to creep up."

High rents weren't the only story. The east Valley had a 3.2 percent vacancy rate, down from an already historic low of 5.5 percent in the same period last year. The central Valley saw nearly 60,000 square feet of net absorption, up sharply from the 13, 567 square feet of space given back in the third quarter of 2005.

The West Valley, which typically leads all submarkets in activity, was relatively quiet. Brokers said a bump of 1 percentage point in the vacancy rate to 8.7 percent, and negative absorption of 74,992 square feet was due mainly to several large sub-lease blocks in Chatsworth coming back on the market.

Rentals were focused on Warner Center, in space owned by Douglas Emmett. Konica Minolta Business Solutions took 8,431 square feet in the Trillium, 6320 Canoga Ave. Terms were $2.23 FSG for 61 months, with 3 percent annual bumps. Product liability attorneys Tropio & Morlan signed for 9, 680 square feet in Warner Center Tower No. 6, 21700 Oxnard St. Terms were $2.30 gross for five years.

Activity was more vibrant on the east side, which, by quarter's end, had just 90,000 feet of rentable space left in a 2.8 million-square-foot base. East Valley leasing was highlighted by broadband Web designers Tuesday Group signing for 11,897 square feet in North Hollywood's Academy Building, 5200 Lankershim Blvd., for seven years at $2.30 full service gross.

Bankers Toolbox was one of five companies that gobbled up Class B space at 6400 Laurel Canyon Boulevard, North Hollywood. The software firm, which targets regional and community banks, took 12,667 square feet from Milan Properties. Terms were set at five years for $1.70 per square foot.

Trevor Belden, principal with Lee & Associates in Sherman Oaks, noted that the 87,772-square-foot building was only 35 percent occupied last year, with rates 35 cents lower. Occupancy at the site is now 100 percent, with six of the last 10 leases going long-term, underscoring the word on the street.

"We're telling tenants to sign deals for as long as possible," said Stacy Vierheilig-Fraser, senior managing director with Charles Dunn Co. Inc. "'The cousumer price index has been over five percent in recent months, and the leases are all coming in with heftier annual increases."

Another impact of the rate hikes was a sprucing up of" more down-market locations. Roscoe Investments LLC began renovations on a former Union Bank site at 14500 Roscoe Blvd. The upgrade will bring 71,000 square feet of new Class A space to Panorama City. One block east, Maefield Development Corp. was eyeing a 452,000-square-foot mixed-use project on a former Montgomery Ward site. Both projects have backing from the Los Angeles Community Redevelopment Agency and the Valley Economic Development Center.

Valley sale transactions included 6047 Tampa Ave. in Tarzana. The 22,207-square-foot Tampa Topham Office Plaza traded at $222 per square foot, or roughly $4.9 million. The seller was the Litinetsky Family Trust; the buyer was an investment group led by Lee Grant Muller.

The 34,000-square-foot Agoura Business Center, 29800 Agoura Road, Agoura Hills, was sold for $7.7 million. The buyer was a private individual, Vinie Gupta, and the seller was Holualoa Realty Advisors.

The largest West Valley transaction, albeit for Class B space, was Koll Co.'s three-building office park at 5000-5016 N. Parkway Calabasas. The 117,724-square-foot Calabasas Courtyard was bought by the Newport Beach developers for $26.5 million from SCI Investments and were 91 percent leased at closing.

Major Events:

* D/R Added Value, signed a seven-year leasem valued at $7 million at the former Hanna-Barbera Studios 3400 Cahuenga Blvd. in Universal City. McGregor Co. is renovating the 31,000-square-foot site for a 2007 occupancy.

* Broadband Web designers Tuesday Group leased 11.897 square feet in the Academy Building, 5200 Lankershim Blvd., North Hollywood. Terms were for seven years at $2.30 per square foot full service gross.

* Roscoe Investments LLC began renovations on a former Union Bank site at 14500 Roscoe Blvd. that will bring 71,000 square feet of new Class A space to Panorama City.

* Koll Co. purchased Calabasas Courtyard, a three-building Calabasas office park at 5000-5016 N. Parkway for $26.5 million from SCI Real Estate Investments.

By DAVID GEFFNER

Contributing Reporter