Huge Creative Office Supply Will Hit Santa Monica

The two-building Santa Monica Gateway totals 200,000 square feet.

LOS ANGELES— Colorado Creative Studios is bringing much needed new construction creative office to the market. Ground has just broken on the Santa Monica Gateway, a two-building 200,000-square-foot property with subterranean parking located at 2834 Colorado Avenue. New development is rare in Santa Monica and there is a dearth of supply in the market. As a result, this development will help to satisfy the unceasing demand in the market. “The developer owned the land for a very long time, and it has taken him years to this approved. It is the only new building of any consequence under construction in the market, and it is bringing much needed relief for new construction,” Carl Muhlstein , managing director at JLL , tells GlobeSt.com. Muhlstein is handling development management and lead leasing efforts for the property, along with his JLL colleague Tom Cherry . The building will be a stark contrast to much of the product currently available in Santa Monica, much of which is more than 30 years old and in need of rehabilitation, according to Muhlstein. With already high demand in Santa Monica, this building is expected to see immense interest both from tenants looking to break into the market as well as existing tenants in outdated buildings. “Tenants know that there is a very finite supply and most of the buildings in the market are more than 20 years old and most of the tenants with existing leases have changed the way that they conduct their leases,” he adds. “Rather than live through a remodel and a restack with new technology, it is easier to just move.” The leasing team will focus on entertainment and tech tenants, which are the most prevalent tenants looking for space in the market. “The building will be a brand new and high-performance building, meaning that it is built to all of the latest codes, so we are focused on entertainment and tech tenants,” says Muhlstein. “We have a 60,000-square-foot and a 135,000-square-foot building, so it is possible for someone to occupy their own building. We have been exchanging proposals with tenants that would either occupy the full smaller building or that would occupy half of the larger building, depending on the floor plate that we need. We just broke ground, so we are focused on the larger users. As we solve that part of the puzzle, we will focus on smaller multi-tenant floors, if we need to.” The property is also an 8-minute walk from the future EXPO line, which will likely help to drive interest. While he doesn’t want to predict that the building will be fully leased before completion—which is planned for 2017—he says that it will be leased in “short order” following the opening in 2017. That is because Santa Monica is no longer the only market on the Westside facing supply issues, huge demand and increasing rents. “It is such a prime location and the supply constraint facing Santa Monica right now is starting to evolve in other markets. It is certainly not easy to get a building permit in West Los Angeles, and Playa Vista has 500,000 square feet left to lease before they are fully built out,” explains Muhlstein. “Tenants are doing a U-turn and focusing on Santa Monica, because the alternative is to jump LAX and go to El Segundo or go east to Downtown Los Angeles, and both are not easy to come to grips with.”