Landlords should have been singing “Hooray for Hollywood” last quarter as the office market there experienced gains across the board.
Little office space is available, due in part to an influx of office-to-residential conversions in recent years, which took a chunk of office square footage off the market permanently. But thanks to Hollywood’s publicized cleanup, improved reputation and rents that are more affordable than Westside markets, the area is in demand.
Vacancy rates fell throughout 2006, ending last quarter at 4.9 percent, less than half of the market’s vacancy rate during the same period in 2005, according to Grubb & Ellis Co.
“We get a lot of people who now understand that Hollywood is a viable relocation option, while two or three years ago people were still on the fence,” said John Tronson, a principal with Ramsey-Shilling Co.
And with that demand comes new construction. After a decade of no new Class A office high-rises, last quarter Pacifica Ventures completed its purchase of a parcel at 1601 North Vine for $5.45 million. Pacifica plans to begin construction of a 120,000-square-foot, seven-story Class A office building later this year, scheduled for completion in late 2008.
Hollywood can use the space, since the market currently has one of the lowest amounts of rentable office square footage in all of Los Angeles County. Many other Hollywood projects are in the works, mostly with a focus on retail and residential.
Lizbeth Scordo
MAIN EVENTS
CNN created its own news in Hollywood when its West Coast Bureau renewed its lease at 6430 Sunset Blvd. for 15 years, after speculation it might be moving. The cable news channel added an additional 5,000 square feet to its lease, bringing its total occupancy to 33,421 square feet. The deal was valued at over $19 million.
Gerding Edlen Development Co. LLC purchased a 72,000-square-foot site at the corner of Sunset Boulevard and Gordon Street for approximately $19 million from GTO Development LLC. Gerding Edlen plans to start construction of a mixed-use project there by early next year. The development will feature office and retail space as well as condominiums.
Pacifica Ventures, a joint venture between real estate and entertainment executives, closed on a lot at 1601 North Vine St. Pacifica plans to build a seven-story Class A office building on the site for tenants in the entertainment industry. The building, scheduled for completion in late 2008, will include space for ground-floor restaurants, a top-level penthouse and roof deck, and underground parking.
Leasing is expected to begin this year on the mixed use project Legacy Partners and Gatehouse Capital are developing at Hollywood & Vine, which will include apartments, condominiums, a W Hotel, retail space and an MTA station.
Private investor Ramesh Ohebsion purchased a Class A, 8,583-square-foot retail building in West Hollywood for $7.3 million from Ah Men Inc. The two-story building at 8900 Santa Monica Blvd. is 100 percent leased.
