It might not be obvious by the numbers, but Hollywood’s office submarket had a strong second quarter.
Office vacancy rate remained flat at 14.2 percent last quarter compared with the year-ago period, according to Jones Lang LaSalle Inc. While that figure might not look impressive, consider that the amount of office space available to rent in Hollywood actually increased by about 9 percent over the course of the year to 2.3 million square feet.
When you pair that with how the vacancy rate dropped nine-tenths of a point from the first quarter this year, you start to get a clearer picture of just how hot the submarket really has become. In all, tenants took 21,108 square feet off the market last quarter.
“Demand is definitely up,” said Nicole Mihalka, a senior vice president at JLL. “We are back. Rents are back at or above numbers in ’06 or ’07 and sales values are back up to that level as well.”
Landlords raised average asking rates 38 cents to $3.70 a square foot compared with the year-ago quarter. And a 1.8 acre piece of land sold for $28 million last quarter – among the highest in Los Angeles County for a development site.
The area is being buoyed by a boom in interest from entertainment and creative companies looking to take advantage of the hip area’s popularity with the millennial workforce.
Developers are doubling down on efforts to build even more office in the area. In the second quarter, Miracle Mile developer J.H. Snyder Co., pulled permits to build a second project in Hollywood. This new $60 million venture will be an eight-story, 107,000-square-foot office and retail tower at 1601 Vine St.
West L.A. developer Kilroy Realty Corp. unveiled plans for its third Hollywood project: a $285 million campus that will include three four-story office buildings totaling 100,000 square feet, as well as retail and residences at Vine and De Longpre Avenue.
None of this is surprising to Industry Partners’ Trevor Belden, who said that the vacancy rate in Hollywood is even tighter for this type of creative space.
Still, with several hundred thousands of square feet of office space in the pipeline, it’s hard to know if Hollywood can keep up its hot leasing streak.
John Tronson, principal at Avison Young Inc., said the additional inventory could be good for the submarket.
“I anticipate it gets gobbled up by very large users who wouldn’t have previously considered Hollywood because there wasn’t enough space,” he said.
– Jacquelyn Ryan
Amoeba Music bought its retail building for $13.6 million from LLJ Ventures. Amoeba had sold the 50,000-square-foot property, at 6400 W. Sunset Blvd., to LLJ in 2009 in a sale-and-lease-back deal but bought it back last quarter through an option in the five-year-old agreement.
Beverly Hills real estate firm Koar bought the 49,000-square-foot Citizens News Building at 1545 Wilcox Ave. for $14.6 million from Santa Monica’s Brentwood Capital Partners.
Kilroy Realty Corp. signed four new leases at its Sunset Media Center, 6255 W. Sunset Blvd. Tax Credit Co., signed a deal for 12,900 square feet at the 22-story office tower.
Rescore and Cal-Coast Development partnered to buy a 1.8-acre plot at 1347 Cahuenga Blvd. for $28 million from a group of nine co-owners. They plan a $110 million project with 300 apartments and 18,000 square feet of office space.
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