West L.A.'s Creative Space Vacancy Hits Lowest Levels Since 2008
After a lackluster first quarter, leasing activity for creative office space has picked up dramatically in almost all areas of Los Angeles’ Westside, including Santa Monica, Playa Vista and Culver City.
According to Industry Partners Los Angeles Westside Creative Market Report, the increased demand for creative space in these markets —more than 16 million square feet in total — fell to 10.6 percent vacancy rate, the first time vacancies have fallen below 11 percent since 2008.
The most dramatic decrease in available space took place in Culver City, where its redevelopment in and around the Hayden Tract has brought vacancies down to 6.6 percent at the end of the third quarter — down from 9.5 percent for the same period last year. Large-scale deals, such as Runyon Group’s 40,000-square-foot creative office and retail mixed use development The Platform, continues to bring new life into the area. One of the biggest deals to hit the area this year was a long-term lease signed by Beats by Dre in September. Totaling almost 200,000-square-feet, the audio technology company will occupy several buildings on Higuera Street and Stella Drive.
Playa Vista continues to improve as well. In the past six months, almost 100,000 square feet of creative office space has been taken off the market, most of it to advertising agencies such as Kastner & Partners, which launched and created the Red Bull campaign. The agency signed a 15,000-square-foot, long-term lease on Alla Road in October. The company now joins agencies such as Deutsch, Chiat Day, Team One and many others on what is now being referred to as the area's “ad agency row” on Jefferson Boulevard between Lincoln and the 405.
Despite the highest rental rates on the Westside, the Santa Monica creative office market continues to be the first choice for creative office users. Recent deals include Deluxe Entertainment, which signed a 12-year lease with Hudson Pacific Properties to occupy a newly renovated, 65,000-square-foot production facility at Bergamot Transit Village (at Olympic Boulevard and 26th Street) last month.
But the real Santa Monica action has yet to come. Industry Partners principal Jim Jacobsen says that the Transit Village will continue to attract big creative office space deals by end of year, predicting that Riot Games, Lionsgate, Red Bull and Amazon could be among those expected to sign new leases and/or expansions for as much as 500,000 to 1 million square feet.