Back in the tech boom, creative space was in demand on the Westside as startups and spin-offs sought out seaside locations that appealed to the high-caliber employees they wanted to hire and near the beach communities where staff and executives alike wanted to live.
A decade later, another boom is driving demand for creative space, this one fueled by content-heavy enterprises relocating to, and launching and expanding on the Westside.
“ ‘Tech’ and ‘media’ are still the magic words on the Westside,” said Mike McRoskey, managing director of tenant representation for Jones Lang LaSalle Inc.
Jones Lang LaSalle data show overall asking rates for the Westside up to $3.80 a square foot, a 17-cent year-over-year increase and 3-cent increase from the prior period. Vacancy ticked up slightly to 17.4 percent in the first quarter from 17 percent at year’s end.
“The past few years were characterized by small, below-10,000-square-foot leases,” explained Neil Resnick, principal and managing director at Avison Young. “In the aftermath of the recession, we’re seeing more direct deals, albeit still smaller in size.”
Transactions were split among the traditionally popular Century City, Beverly Hills and Santa Monica submarkets, and the less-tony Olympic Corridor, which benefited from lower rents and proximity to Silicon Beach.
“Olympic is the absolute best price point on the Westside, with high-$2-to-low-$3 deals in the best buildings,” said Brad Feld, a partner at Madison Partners. “If you can’t afford Santa Monica, that’s a really good low-cost alternative.”
Santa Monica has the highest asking rates on the Westside and saw the highest annual increase in asking rates, up 35 cents to $4.72 a foot. That’s even as vacancy crept to 12.4 percent from 12.1 percent in the final quarter and 10.1 percent a year ago.
In the West L.A.-Olympic Corridor submarket, landlords jacked up Class A rates 31 cents in the last year to $3.28 from $2.97 in the first quarter of 2012. This came in response to a vacancy drop to 12.8 percent from 16.9 percent a year ago fed by positive absorption of 14,580 square feet.
The Westside’s sustained strong performance also attracted investment, particularly of the foreign variety, according to Bob Safai, a founding partner at Madison.
“The first quarter saw a real surge of activity of buyers – local, national and international – looking at Los Angeles as a primary market. Everyone’s done their pull-backs and layoffs, there’s no new construction of any consequence and building costs are enormous here. Institutional and high-net-worth buyers see L.A. as a great place to put their money long term.”
– Margot Carmichael Lester
*Maxxam Enterprises, a commercial property developer and manager, bought the 87,596-square-foot Bank of America building at 9440 Santa Monica Blvd. in Beverly Hills for $24.5 million from Real Estate Capital Partners.
*The 14,573-square-foot building at 1545 26th St. in Santa Monica was sold to owner-user 1545 26th Street LLC for $7.25 million by 26th Street Associates.
*Discovery Communications renewed its 39,822-square-foot lease at 10100 Santa Monica Blvd. in Century City for another 10 years.
*Rubicon Project, a digital advertising infrastructure company, relocated and expanded from 33,548 square feet at 1933 S. Bundy Drive in West Los Angeles to 46,643 square feet at 12181 Bluff Creek Drive in Playa Vista at $3.15 per square foot.
*Postproduction house Picture Head LLC took 3,600 square feet at 2228 Purdue Ave. in the West L.A.-Olympic Corridor submarket for $2.75 full-service gross.
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