The views from office towers near Los Angeles International Airport can be great. Tenants watch planes coming and going or check out the city skyline and the Pacific Ocean. They just don’t have much company.
The LAX market has been softer than a marshmallow for decades, but vacancy has now hit a staggering record high of 40% as tenants flee for anywhere-but-there.
Many office markets in the region reported gains in occupancy last year, but the aging LAX-area buildings clustered on Century Boulevard had a net loss of 95,000 square feet of rented space, real estate brokerage Avison Young said.
Vacancy is rising even though LAX is probably the cheapest place to rent an office on the Westside. Average monthly rents are $1.56 per square foot per month, about the same as the price of renting space in Peoria, Ill., and noticeably less than it costs to get an office in Detroit.
Rents in nearby Marina del Rey and El Segundo are 93% and 68% higher, respectively, brokerage Avison Young said.
“Why the stark contrast? Experts point to the lack of amenities and airport-related traffic as reasons,” said Forest Crandall of Avison Young. “However, this hardly explains the strange phenomenon. The truth is, people simply do not want to work in the airport area.”
One landlord recently decided to throw in the towel. The 12-story Royal Airport Center at 5933 W. Century Blvd. will be turned into a 231-room Residence Inn by Marriott, contractor R.D. Olson Construction said.
Olson will perform the $44.5-million makeover for the building's new owner, a limited liability company called Svi Lax.