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Tuesday, Jun 6, 2023

REAL ESTATE QUARTERLY: Vacancy Rate Rises but Big Leases by Media Firms Steal Spotlight

-Netflix Inc. will double the size of its L.A. operations with its lease at Hudson Pacific Properties Inc.’s Icon Tower, under construction at 5800 W. Sunset Blvd. Netflix will occupy 200,000 square feet of the 323,000-square-foot tower, expected to open in 2018. Terms of the deal were not disclosed.

-Chinese developer Gemdale Corp. announced plans to construct a $125 million mixed-use complex on Western Avenue near Sunset Boulevard with Century City’s LaTerra Development.

-BuzzFeed leased about 52,000 square feet at Siren Studios’ media campus for its video department. It will move from about 40,000 square feet at Kilroy Realty Corp.’s De Longpre Avenue project, where its Academy development project is slated for construction. Terms were not disclosed.

-Hollywood International Regional Center, an EB-5 investment fund, bought a 20,600-square-foot plot at 1541 Wilcox Ave. for $6.5 million. The owner plans to get a Thompson Hotels-branded hotel approved for the site.

-Rideback Ranch bought 755 Seward St. for $4 million, or about $666 a square foot, from ISGO Lepejian Photo Lab.

A small slump in absorption didn’t deter blockbuster deals from going down in Hollywood’s office submarket in the third quarter.

Hollywood’s vacancy rate grew 1.5 points to 14.2 percent quarter to quarter as tenants gave back more than 32,000 square feet, according to Jones Lang LaSalle Inc.

But the numbers don’t reflect some of the major deals by companies such as Netflix Inc. and BuzzFeed that were pinned down in the third quarter.

“Last quarter was a notable uptick in activity in offers, tours and signed leases,” said John Tronson, a principal at Avison Young who covers the north L.A. area. “It’s getting better at a pretty steady pace.”

In the largest lease deal in Los Angeles County last quarter, video streaming service and production company Netflix leased 200,000 square feet at Hudson Pacific Properties Inc.’s Icon tower now being built at its Sunset Bronson Studios property.

The 323,000-square-foot project is scheduled to fully open in 2018.

“It proves there’s a market in east Hollywood,” said Nicole Mihalka, a senior vice president at JLL in downtown Los Angeles.

Meanwhile, BuzzFeed leased an additional 52,000 square feet at Siren Studios’ campus at 6063 W. Sunset Blvd. to relocate its video department from Kilroy Realty Corp.’s soon-to-be redeveloped De Longpre Avenue property, where it occupies 40,000 square feet. The content and media company also occupies 22,000 square feet at Kilroy’s nearby 6255 W. Sunset property.

Kilroy plans to transform the De Longpre site into a 260,000-square-foot mixed-use project known as the Academy. It’s also underway on its $420 million mixed-use Columbia Square project, where media giant Viacom Inc. agreed to lease 180,000 square feet and NeueHouse, a co-working-space firm, agreed to lease 93,000 square feet last year.

BuzzFeed is still seeking 200,000 square feet after a deal in downtown L.A.’s Arts District fell through last quarter. It might seek that space in Hollywood, where more than 1.13 million square feet of office space is under construction, Mihalka noted.

Sales are booming as well.

A property at 755 Seward St. sold for $4 million, or $666 a square foot – a spike from the $250 a square foot paid for the property in 2010. Rideback Ranch bought the facility from owner-user ISGO Lepejian Photo Lab.

A 20,600-square-foot plot of land at 1541 Wilcox Ave. traded hands for $6.5 million. New owner Hollywood International Regional Center, an EB-5 investment fund, is working to get a Thompson Hotels-branded hotel approved for the site.

Development isn’t limited to office either. Chinese developer Gemdale Corp. and Century City partner LaTerra Development in plan to converted a four-acre site on Western Avenue near Sunset into a six-story building with up to 254 apartments and shops. Construction is expected to begin this year and be completed in 2018.

– Jacquelyn Ryan

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