3.9 million square feet
Under Construction: 0
Class A Asking Rents: $3.23
The Hollywood/West Hollywood market eagerly awaited new planned office projects last quarter as rents rose again, even as the market remained relatively flat.
Class A rents were up $0.08 to $3.23, a near 12 percent gain from the same period a year ago, but the question of what the future holds for area rental rates looms as the market gave back some 3,500 feet of space.
"In order to make a fair return, the new buildings are going to require rents that exceed the highest rents in West Hollywood now, but that doesn't mean that's necessarily what's gong to happen," said Mark Sullivan, executive vice president, director, and regional manager with Studley. "It will be interesting to see the impact on the market when these buildings become real, viable, near-term options."
A groundbreaking ceremony was held last month at the site of the Red Building, a 400,000-square-foot architectural office complex and the final phase of West Hollywood's Pacific Design Center. Later this year, Pacifica Ventures plans to begin construction on a 120,000-square-foot Class A office building at 1601 N. Vine St. in Hollywood.
That amount of new construction could have a solid impact on a market that has lost a portion of its older office buildings to the residential conversion trend in recent years. Hollywood and West Hollywood currently have 3.9 million rentable square feet of office space, significantly less than other markets that also attract entertainment users, such as Burbank, which has seen rents increase and vacancies dip over the last year.
-In West Hollywood, movie studio New Line Cinema has restructured and extended its lease in the Pacific Theatres Building. New Line had occupied the ground floor, floors two through six and most of the building's seventh floor. Under the new, 10-year lease, the firm will expand its occupancy by 8,000 square feet to approximately 66,000, allowing it to occupy the balance of the seventh floor and expand to the ninth floor. The deal also includes an allowance for renovation of New Line's existing premises, as well as plans to upgrade the building's main lobby and other common areas.
-Ground broke last quarter on the Red Building, a 400,000-square foot office project that will complete the Pacific Design Center complex in West Hollywood. Jones & Jones, a contractor based in Ojai, has been hired by developer Charles S. Cohen to construct the structure, which is slated for completion in two years.
-An undisclosed buyer has purchased a 3,076-square-foot retail building at 8280 Melrose Ave. in West Hollywood for $3.5 million from private sellers Jack and Ann Rode. According to Charles Dunn Co., which represented both parties, the buyer also owns several properties on Melrose and plans to perform minor upgrades and renovations to the building before leasing the currently vacant building.
-Down the street, a private party purchased a portfolio of two buildings at 8474 and 8478 Melrose Ave. for $8.8 million. The single-story buildings, totaling a combined 6,364 square feet, serve as home to trendy restaurants Ago and Lucques. The seller also was an individual.
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