The numbers say Hollywood had a slow first quarter, but it would be hard to tell from a landlord’s or developer’s perspective.
The market gave back 14,125 square feet, pushing its vacancy rate up to six-tenths of a point to 15. 1 percent in the quarter ended March 31 compared with the previous period, according to data from Jones Lang LaSalle Inc. But brokers said that the negative absorption is slight, with only a few small givebacks responsible for the number and the market hasn’t slowed down.
“We’ve been busier than ever,” said Nicole Mihalka, a senior vice president at JLL who brokers deals in Hollywood. “We are getting interest from entertainment companies and bigger production companies that are looking to consolidate and also tech- and media-type companies.”
Indeed, by all other metrics, the market appears to be moving up quickly. Landlords hiked up Class A asking rental rates by 14 cents to $3.71 in the first quarter – the steepest price hike in Los Angeles County.
John Tronson, principal at Avison Young Inc., said he’s seeing the highest rates ever in Hollywood and it’s not deterring interest at all.
“For several years I would call the market good but not great. Now I would have to upgrade the office market to very good,” he said. “All we need is one big lease deal of 100,000 to 200,000 square feet at one of the development sites and we could go from very good to excellent very quickly.”
Among the largest deals done in the market last quarter was a lease deal by SAE Institute. The Australian audio engineering school signed up for 41,000 square feet at 6700 Santa Monica Blvd. and 1017 N. Las Palmas Ave., nearly doubling its requirement when the institute decided to move into the former Eastman Kodak Co. campus, under renovation by new co-owners Lincoln Property Co. and CEM Realty Capital Inc.
Perhaps most tellingly, developers are under way on 284,574 square feet of new office space in the neighborhood, an indication they are anticipating massive growth in the area as well.
West L.A. real estate investment trust Kilroy Realty Corp. purchased a four-acre development site at Sunset Boulevard and Vine Street from the Academy of Motion Pictures Arts and Sciences for $46 million in January and plans to spend $285 million to build a 475,000-square-foot campus with offices, apartments and shops.
Kilroy is already under way on a nearby 875,000-square-foot Columbia Square mixed-use project.
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