Office rental rates throughout L.A. County keep sinking lower.

Rental rates continued to fall at office buildings throughout Los Angeles County in the third quarter of 1992, as building owners waged competitive battle to win tenants in an over-built market.

"Clearly, they (rents) are coming down. The question is: 'Where is bottom?'" noted Neal Roberts, director of real estate advisory services at accounting firm Coopers & Lybrand.

Roberts predicted that Arkansas Gov. Bill Clinton will be elected president and will keep his promise to energize the economy by investing in jobs, and thus the real estate market will begin to recover in about a year.

"I think a new administration that puts more money into the economy will juice things up," said Roberts. "I'm a little bit more positive, based on this election."

The average office rent in downtown Los Angeles fell from $26.33 (per square foot) in the second quarter to $25.51 in the third quarter, a decrease of 3 percent in three months, according to a third quarter report from Cushman & Wakefield. Similarly, Julien J. Studley Inc. listed an average downtown rental rate of $25.49, as of September, 1992.

Paul Garity, principal with KPMG Peat Marwick, said he believes lease rates downtown have hit bottom, because lenders won't accept landlords charging any less.

Real estate foreclosures also continued to skyrocket in the third quarter. Foreclosure volume in Los Angeles County in August topped $364 million, up 62 percent from the same month last year and up 21 percent over July, 1992.

In the mid-Wilshire area, average rents fell from $21.10 to $20.83, and in the Tri-City area from $23.85 to $23.55. In the San Gabriel Valley, average rents fell to $19.97 from $20.05 in the second quarter, Cushman & Wakefield reported.

On the Westside, rents are higher, but falling.

According to a report from Julien J. Studley Inc., average rents in West Los Angeles were ranging from $22.66 in older buildings to $28.14 in new buildings, as of Aug. 31, 1992. This represents approximately a 12 percent decline in rents at newer buildings, compared to the like period last year.

In "the suburbs," rents may continue to decline, Garity said, as landlords compete more aggressively for tenants.

Vacancy rates have declined in some markets due to the lack of new space coming on the market in recent months.

The 801 Tower, a 24-story office building on the Figueroa Financial Corridor, officially opened Sept. 15, signally the end of the downtown building boom of the late 1980s.

No major new buildings broke ground downtown, and it may be four years before another one is built.

The 801 Tower opened 40 percent pre-leased.

The vacancy rate for the commercial business district declined during the third quarter by 1.7 percent to 27.5 percent, according to the Cushman & Wakefield report. Net absorption downtown totaled 211,484 square feet.

Major leases included the Metropolitan Water District's lease of 166,000 square feet in Two California Plaza. Sidley and Austin leased about 52,000 square feet in the Gas Company Tower.

In August, Unocal completed negotiations for the lease of 450,000 square feet in the Los Angeles Center, where it plans to move in 1986. The entire development is planned to eventually include 5.5 million square feet of space.

Other major real estate news downtown in the third quarter included the threat by hundreds of tenants at the California Mart wholesale apparel center to vacate en masse and move somewhere nearer to Los Angeles International Airport, where rents are lower and there is less crime.

The tenants formed an association and sent out requests for proposal. They currently are reviewing the proposals submitted.

Vacancy rates remain high in the Airport area at 27.2 percent, and the South Bay at 24.8 percent, according to Studley, due to the exodus of aerospace and defense contractors.

The vacancy rate along the mid-Wilshire corridor edged up slightly in the third quarter from 22.4 percent to 23.1 percent, but the vacancy rate along Miracle Mile fell 2.4 percent to 21.6 percent.

Cushman & Wakefield reported that Miracle Mile has become an attractive alternative to Mid-Wilshire tenants wishing to move away from the Metro Rail Red Line construction in their neighborhood.

Vacancy rates in the Tri-Cities declined from 17.6 percent to 16.7 percent in the third quarter, according to Cushman & Wakefield.

Entertainment companies continue to be drawn to Burbank's media district despite slightly higher lease prices. Average lease prices in the Tri-Cities, according to Julien J. Studley Inc., ranged from $21.78 in older buildings (down from $22.28 last year) to $27.19 in newer buildings (up from $26.56 last year), as of Aug. 31, 1992.

Walt Disney Studios recently received approval for expansion plans in Burbank and also continues to lease space there. In the third quarter, Warner Bros. leased 8,800 square feet at Central Park, and the Disney Channel took 7,400 square feet at the Compact Video Center.

The City of Burbank is aggressively pursuing Twentieth Century Fox and Sony Pictures Entertainment as future residents. Small entrepreneurial companies also continue to flock there.

Burbank also has been looking for companies to take over hundreds of acres being vacated by Lockheed Corp. near the Burbank-Glendale-Pasadena Airport. So far, Wolff Sesnon Buttery White has signed up to build the 680,000-square-foot Burbank Airport Center office complex. Negotiations are ongoing for development of a Walmart-anchored retail mall and an airport terminal.

The Westside also has been helped by the movement of entertainment firms from Hollywood to such places as Beverly Hills, Santa Monica and Century City.

In the San Fernando Valley, leasing activity is increasing on the Westside and slowing on the Eastside.

According to Seth Dudley, corporate vice president at Julien J. Studley Inc. in Los Angeles, the West San Fernando Valley "has experience the greatest increase in annual leasing activity of any Los Angeles submarket."

The vacancy rate for the West San Fernando Valley, according to Studley, was 21.4 percent, as of Aug. 31. The vacancy rate for the East San Fernando Valley was 16 percent, which represented a sharp increase from 13.3 percent in June.

Dudley attributed the rising vacancy rate to the migration of tenants to Warner Center and the failure of businesses in Sherman Oaks and Encino.

20th Century Insurance has signed a letter of intent to occupy 400,000 square feet of to-be-built office space at the Warner Ridge development, which could help secure financing for the first phase of construction on that project.

Major lease transactions in the San Fernando Valley during the third quarter included Candle Corp.'s lease of 55,000 square feet at 5795 Lindero Canyon Blvd. in Westlake.

Average lease rates in the San Fernando ranged from $15.76 in older buildings to $20.81 in newer buildings. This represents a slight increase over last year, when the average rates ranged from $15.31 to $19.26.