Collier’s International released its third-quarter Office Market Report for the San Fernando Valley and Ventura County two weeks ago. The news was generally positive, according to Roger Beck, vice president of Colliers’ office division. Although commercial vacancy rates rose by 10 percent they are still at a reasonable 9.8 percent and there has been no discernable change in rental rates. Most of the newly vacant office space is the result of, you guessed it, shuttered mortgage finance and related companies. Half of that is large blocks of space, over 15,000-square-feet and bigger. According to Beck, activity has been pretty constant on smaller suites. “What’s interesting about what’s going on now,” said Beck, is that “even though there is more space, landlords aren’t reducing rates at all.” He went on to say that asking rates in most parts of the Valley have increased monthly over the last 12 months but have stabilized now. According to Beck, this is at least in part because a lot of the commercial office property in the Valley is owned by REIT’s (real estate investment trusts) who need to maintain property values for their shareholders. “A lot of them are happy to sit on vacant space and hold their rates,” said Beck. Although some minor concessions are being given, such as additional tenant improvement allowances or parking offsets, no one is really budging, said Beck, “not even the little guys.” Another reason for firm rental rates is that the costs for new construction, like the 300,000-square-foot LNR Center nearing completion on Canoga Avenue in Warner Center, are so high that owners need to get extremely high rents to get a decent rate of return. Sounds like some people have their fingers crossed. The only commitment penciled in for LNR’s new project is 20,000 square feet for Countrywide. Anybody want to take the overs on that bet? And aside from the LNR Center, there is nothing notable in the planning stages. The one part of the Valley where office rents have continued to climb is in Encino and Sherman Oaks, the areas at the base of “the hill,” immediately adjacent to the 405 and 101 freeways. While Warner Center landlords are seeing full-service gross numbers of roughly $2.85 completed, over in Encino and Sherman Oaks the closed comps are closer to $3.00 and even as high as $3.20, said Beck. “That’s unusual, because up until the last six months we really haven’t been seeing profoundly higher rates over there,” he continued, “but the vacancy rate in Sherman Oaks and Encino is so low now it’s 4 percent at most.” Beck said that with rents as high as $6 per square foot in West L.A., Brentwood and Santa Monica, many companies are finding the south end of the Valley a very agreeable alternative. Things are different up in Northridge and Chatsworth. “The Washington Mutual complex is almost all vacant,” said Beck. It seems those westsiders want their office space located along public transportation lines which gives the buildings along the Orange Line an edge in attracting tenants. “I keep waiting for activity to slow down,” said Beck, “and it is staying strong.” Koll Acquires Calabasas-Adjacent Parcel A 4.97-acre vacant parcel on Ventura Boulevard, just below the Valleycrest headquarters on the north side of the 101 freeway, has been purchased by Koll for $12 million. Don Wood, Koll’s development director, confirmed the acquisition but did not have further details. With land sales in the area running in the $40 to $45 per-square-foot range, this is a high-water mark, said Colliers’ Roger Beck. Plans are to construct an 85,000-square-foot Class A office condominium development. Maureen Tamuri, Calabasas community development director, said she wasn’t aware of the sale. The project is not actually in the city, she said, but rather in an unincorporated area of Los Angeles County and the original entitlement for an office building probably dates back to pre-city entitlement. “We’ll just have to live with it,” said Tamuri. Both Tamuri and Beck said that Ezralow, the seller, had at some point entitled the parcel for a residential senior-housing condominium project, a use that would seem to be a better fit for that traffic-choked side of the freeway. The only way to get to or from that side of Ventura Boulevard is from Parkway Calabasas, across a two-lane bridge. During rush hour it can be a real challenge. Unless some traffic mitigation is planned, Koll’s high-profile neighbors (both Stevie Wonder and Barbra Streisand’s business manager live up the hill) can be expected to put up some opposition to new construction, said Beck.