The Hollywood office market fared slightly better in the fourth quarter than the third, though a quick glance at the numbers might have one believe otherwise.
At 22.7 percent, the vacancy was six-tenths of a point higher than in the third quarter, though still much improved over the year-earlier period, when it stood at 25 percent. More than 13,000 square feet were also put back on the market for the second quarter in a row, according to data from Jones Lang LaSalle Inc.
But even as vacancy rates rose slightly, so too did rents. Average asking rents for Class A office space were at $2.94 in the fourth quarter, up 16 cents from $2.78 in the third quarter.
Nicole Mihalka at Jones Lang LaSalle said she expected Hollywood rents to keep rising.
“We’re going to see them go back up to 2006 levels pretty soon,” she said.
John Tronson, a principal in Los Angeles with Avison Young Inc., said Hollywood office real estate is benefiting from restaurants and hotels moving into the area.
“In general what’s happening is Hollywood is establishing itself as a really desirable office market,” he said. “That has not been the case over the last 20 years. It’s getting better because more amenities are coming in.”
A handful of mixed-use developments under construction in Hollywood promise to bring more retail and restaurants to the area, including Blvd 6200, a project that began in 2005 and finally broke ground in October. Approvals held up the development for several years. High-rise project Sunset Gordon and the L.A. campus for Emerson College both broke ground last spring and are well under way.
Tronson said the demographics of business owners looking to lease office space in Hollywood have changed, too, especially as the entertainment industry embraces technology.
“There’s a larger percentage of younger people who are owning and operating businesses now,” he said. “They’re the decision-makers, and young people like Hollywood. They like to walk; they don’t mind taking public transportation. They like the sort of grunge factor of Hollywood.”
Mihalka said landlords have noticed the demographic shift and are doing more now to attract a new generation of creative tenants.
“Landlords are exposing the ceilings, polishing the concrete and creating the kinds of collaborative meeting spaces this tenant tends to prefer,” she said.
– Bethany Firnhaber
Century City developer Clarett West Development and DLJ Real Estate Capital Partners broke ground on Blvd 6200, a $500 million mixed-use complex spanning 7.3 acres north and south of Hollywood Boulevard a block east of Vine Street. The six-story development, in the works since 2005, will house 1,035 apartments and 175,000 square feet of retail space.
West L.A. real estate investment firm Kilroy Realty Corp. purchased Columbia Square, a 121,000-square-foot office building at 6121 Sunset Blvd., from New York real estate investment firm iStar Financial Inc. Kilroy plans to spend $300 million to update the building and develop another 550,000 square feet for offices, residences and shops.
Miami-based condo developer Crescent Heights bought the Hollywood Palladium at 6215 Sunset Blvd. for $55 million from owner LSREF 2 Clover Property 4, a limited liability corporation controlled by Dallas’ Lone Star Funds. The 58,822-square-foot music venue has a 20-year lease with Live Nation Entertainment Inc. through 2027.
El Royale Apartments LP sold the historic 106,000-square-foot building at 450 N. Rossmore Ave. to Kamran Hakim for $29.5 million. The 12-story complex, built in 1929, was designed by William Douglas Lee of Chateau Marmont fame. Rents average about $3,500 a month.
Touchstone Pictures signed a two-year lease for the entire third floor of the El Capitan Theatre at 6838 Hollywood Blvd. for use by “Jimmy Kimmel Live.” Rent for the 6,400-square-foot space was $2.95 a foot. The show now occupies four floors of the theater.
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