Recovery shows signs of expanding in the Westside commercial market.

L.A.'s Westside saw significant commercial real estate activity in the second quarter, with both sales and leasing strong.

Local real estate sources described the uptick as the light at the end of the tunnel. They said they expect the activity to remain strong in the third quarter, and to improve further in the months to come.

According to CB Commercial Real Estate Group Inc., the Westside market clocked 608,547 square feet of net office space absorption for the quarter. In other words, 608,547 more square feet of Westside office space was leased during the quarter ended June 30 than was vacated.

Real estate sources were quick to point out that 600,000 square feet represents only a small portion of the more than 30 million square feet of leasable office space on the Westside.

Nevertheless, the second-quarter performance is far better than the Westside ha been posting. In the first quarter, only 181,000 square feet of Westside office space was absorbed.

That comparatively weak performance, however, exceeded the market's net absorption for the entire year of 1993. During those 12 months, only 165,000 square feet were absorbed on L.A.'s Westside, according Grubb & Ellis Co.

The overall office vacancy rate on the Westside slid to 16.4 percent at the end of the quarter. That rate had been up in the 18-to-19-percent range in recent quarters.

So, while the second-quarter activity does not rival the heady days of the 1980s, it still represents a notable upswing.

Several real estate sources pointed to the sale of an office/retail building in Beverly Hills as the most significant transaction of the quarter. The property, located at the corner of Wilshire Boulevard and Beverly Drive in the "Golden Triangle" district of Beverly Hills, was sold to Georges Marciano for $27 million. Brokers said the deal was significant in that it demonstrated tremendous confidence in the Westside.

The building houses 172,000 square feet of office space, about half of which ha been sitting empty and off the market. Marciano's plan is apparently to begin actively marketing that empty space, said Mike Geller, a broker with First Property Realty Corp.

The sale of 9465 Wilshire Blvd. to Marciano demonstrates that good deals exist on the Westside, said Jerry Hess, a broker with Cushman Realty Corp. who represented Marciano in the negotiations. "People will look back on sales of Westside office buildings during 1994 and 1995 and say: 'I remember when we could have bought that building for $150 a foot. We should have done it,'" he said.

A pair of other significant sales were recorded in the Beverly Hills area in th quarter. Larry Flynt bought the former headquarters of Great Western Bank at 8484 Wilshire Blvd., and just west along Wilshire Boulevard, the office buildin purchased by Dino DeLaurentiis in the 1980s was sold to a group called 8670 Property Partners Ltd. The 48,500-square-foot building at 8670 Wilshire Blvd. sold for $4.5 million.

Geller said buyers are realizing there are deals to be had on the Westside because property values have plummeted to the point where buildings are affordable. "We have hit bottom and investors and owner-users are quick to reac when a building becomes available," said Geller.

Beverly Hills was also a hot spot for leasing activity during the second quarter. More than 160,000 square feet of office space were absorbed in the high-brow office and retail district. The most prominent Westside retail deal o the quarter, according to retail broker Matthew May of Beitler Commercial Realt Services Inc., was the lease signed by Cleveland-based The Limited for a space in Beverly Hills where it plans to open a Victoria's Secret outlet.

Despite a healthy second-quarter performance, Beverly Hills maintained the highest vacancy rate of any of the Westside submarkets. Total office vacancy in Beverly Hills at the end of the quarter was 26 percent.

In other significant retail news, Circuit City signed a lease for 25,000 square feet at 1110 Gayley Ave. in Westwood. Real estate sources said they hope the appearance of new "big box" retailers in Westwood can revive that once-hot retail market.

Westwood's office sector turned in a positive performance during the second quarter, with 77,404 square feet absorbed. The largest of the Westwood leases was signed at Center West Tower. That property, at 10877 Wilshire Blvd., inked Electronic Data Systems' new aerospace and defense management consulting division for 15,000 square feet.

The biggest winner in terms of office leasing was Century City. That submarket saw 174,590 square feet of office space absorbed in the quarter. The most significant lease signed there involved Transit Casualty Co., an insurer, movin out of the ailing Mid-Wilshire submarket and into 41,000 square feet at Century Plaza Towers in Century City. Its Mid-Wilshire lease is soon expiring at 3700 Wilshire Blvd.

Farther west, Santa Monica showed strong leasing activity again in the second quarter, which kept its vacancy rate at 8.5 percent, one of the lowest in the county. Despite that submarket's relatively high rental rates, 134,481 square feet of office space was absorbed in Santa Monica in the quarter. The biggest news there was the movement of Aurora National Life Assurance Co. to MGM Plaza. Aurora took a total of 141,000 square feet. That was thought to be the largest lease transaction since Metro-Goldwyn-Mayer Inc. relocated to the project from Culver City.

The Third Street Promenade area continued to be a preferred location for retailers during the quarter. Toys R Us started negotiations to build a two-level store on a portion of the Henshey's department store site adjacent to the Promenade. Ambitious plans to redevelop Santa Monica's Civic Center area were also approved during the quarter. Santa Monica residents gave their thumbs up to the proposed 800,000 square feet of new commercial, institutional and government facilities in the area bounded by Ocean and Colorado avenues, Fourth Street and Pico Boulevard.