Econowatch

Econowatch/6″/cw1st/mike2nd BY JOAN OSTERWALDER Staff Writer 1998 finished with a bang for office vacancy rates, which decreased notably during the last quarter. “Vacancies have gone down considerably, a lot more than expected,” said Alex Rietmann, senior research analyst for Grubb & Ellis Co., a real estate brokerage firm. “The local economy has proven to be more resilient than estimated, especially high-tech companies.” The west Valley had tremendous absorption, he said. The office vacancy rate there went down to 8.4 percent in the fourth quarter from 12 percent in the previous quarter. The overall Valley office vacancy rate dropped from 11.6 percent in the third quarter to 9.5 percent in the fourth. A lot of spaces vacated by the slumping entertainment industry have been gobbled up by insurance, high-tech and health care-related companies, local sectors not yet significantly impacted by the Asian financial crisis, he said. Another reason for the decreasing vacancy rates is the lack of speculative construction, he added. “Office space is coming where it is needed,” he said. “There is more owner-user construction going on. One of the reasons not much speculative construction is going on is because banks are careful, especially after the market scare in the middle of the year that cut off Wall Street-type financing.” As for the year ahead, Rietmann said he expects office rents to rise slightly as vacancy rates continue to decline. “The business environment is still strong in the San Fernando Valley,” he said.