The group, which held a conference call on Monday to showcase itself and to talk about trends and expectations for the office market in a report titled "Western RegionMarket Outlook," has as participants Colliers executives from the Los Angeles area, San Francisco, Portland and Seattle, the areas covered in the report.
Urban Landlord Partners is "a specialized practice team focused exclusively on serving the needs of institutional landlords in metropolitan downtown markets," according to the group's Web site.
The ULP outlook covered the LA areas of Downtown, Century City and the Tri-cities."Downtown actually has been one of the stronger markets in the LA Basin in last 18 months," says Shaun Stiles, a Colliers senior vice president. "People have started to look at Downtown as an alternative."
Stiles credits the relative affordability compared with other areas, such as West LA's office market, as well as the ongoing Downtown renaissance, including improvements at Staples, the anticipated opening of LA Live, and the additions of myriad new residential and new retail options in the area. "Folks are starting to look Downtown a little more," he adds.
Downtown recorded a net absorption in 2007 of 441,400 sf, and in the second quarter of this year a positive absorption of 86,700 sf, while second quarter vacancy dropped to 14.4% overall and 12.3% in Class A properties, with rental rates rising to $39.60 in Class A buildings, the report shows.
On the West Side, with average rental rates around $50 psf, asking rates are expected to soften, and the second quarter's 9.9% vacancy rate could increase slightly due to high asking rental rates, new construction and an increase in sublease space, according to the report.
These factors will also put downward pressure on absorption, says Bill Gloege, a Colliers senior associate. "We would expect that absorption will be really flat continuing through 2008," he says, noting that the area has 3 million sf of buildings coming on line that has "not been spoken for," he adds.
In the Tri-Cities, second quarter's 9.7% vacancy is expected to continue to drop slightly due to continued demand and lack of new product coming on to the market, the report states.
Other areas covered by the report show: In Portland, the 6.6% vacancy rate will "tighten within the Central City as new inventory is being absorbed prior to building deliveries," while rental rates continue to increase; in San Francisco, overall vacancy will rise from 10.4% to 11% because of new supply coming onto the market, with activity for the rest of the year expected from "mature technology companies" in the Silicon Valley area looking for space; in Seattle, expect negative absorption in 2009 with construction deliveries and rates remaining flat.
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