“This could be a real game changer for Playa Vista,” he said. “A tenant of that size not only would reduce vacancy significantly but it might cause another larger tenant to come there.”
Energy drink maker Red Bull is reportedly scouting the area for an 80,000-square-foot lease.
If Riot Games absorbs 300,000 square feet, it could drop the vacancy rate by 16 percentage points to 42 percent, Maharajh said.
Riot Games has experienced exponential growth thanks to the popularity of its “League of Legends” game that draws millions of online players. It has also received substantial financial investments, including a $400 million infusion from Tencent Holdings Ltd., a Shenzhen, China-based Internet company, when it bought a majority stake in Riot in 2011.
The company has grown to more than 1,000 employees from just 75 nearly three years ago. Riot outgrew four Culver City offices in five years before moving into its Santa Monica headquarters. Last year, within months of leasing more than 47,000 square feet for its Santa Monica headquarters, it nearly doubled the size of the lease before moving in. It has since expanded, through direct leases and subleases, to take more than 200,000 square feet at Equity Office Management LLC’s 1.1 million-square-foot Colorado Center at Colorado Avenue and Cloverfield Boulevard.
“We’ve consistently underestimated our need for space, so maybe it’s more of a (scientific wild ass guess) than an educated guess,” Brandon Beck, Riot co-founder and chief executive, has previously told the Business Journal.
A source familiar with the deal said the company could move into the new space next summer.
It would likely begin upgrading and personalizing the office space after the deal closes.
In Santa Monica, the offices are decorated in the company’s signature red, black, white and gray brand colors. It has an open-concept layout with employees and executives sitting in the center of the office, surrounded by glass-walled conference rooms on the perimeter with natural lighting. There is a video game room and the company installed a large open space for company meetings and events.
Randy Starr, principal at the Santa Monica office of brokerage Avison Young Inc. who specializes in representing tech companies, said the lease would be a smart move for the company because it wouldn’t be able to find contiguous space in Santa Monica.
“It makes sense because they are one of the few super big tenants and they need to move because of the way the company is growing,” Starr said. “Riot would be the first big fish down there and have the ability to grow.”
But he said the move won’t open the flood gates for an exodus from Santa Monica, noting that most startup and smaller tech companies that don’t need hundreds of thousands of square feet of space still prefer the established beachside locale for its amenities, location and proximity to other creative companies.
“Santa Monica is going to continue to be the first place these tech companies and entertainment (companies) look,” he said. And the 200,000 feet that Riot will leave behind, he added, likely will be absorbed pretty quickly.