Marina del Rey, the Next Hot Westside Office Market

Playa Vista was once seen as a low-cost alternative to Santa Monica on the Westside, but now the market is as popular and one of the most highly sought after Westside markets. As a result of climbing rental rates, demand is beginning to spill over into the neighboring Marina del Rey market. Specifically, the spill over has spurred activity in the area’s Arts District. While small, the market is thriving and it is now driving activity in the retail market as well. We sat down with market expert Taylor Watson, a senior associate at CBRE, to find out how the micro market is changing. GlobeSt.com: What are you seeing in the Marina Del Rey office market? How is it changing? Taylor Watson: In recent years, the Marina del Rey “Arts District” has seen a tremendous amount of success as the lower-cost alternative to neighboring Playa Vista and Venice. Although still only totaling about 1.5 million square feet of office space, this micro-market is starting to garner an identity of its own. It can claim the same parking and location benefits as Playa Vista, but because it sits at the mouth of the Marina Freeway (90), the area is arguably more accessible to non-locals and commuters. GlobeSt.com: How has the market evolved? Watson: Santa Monica-based The Bradmore Group has had a presence in the area for decades, and the company is often credited with pioneering the transition into a creative office nucleus. Just this quarter the firm completed Truss Campus, a 6-building, 60,000-square-foot project with rooftop gardens and canopied courtyards, but they’re now being joined by a number of other local developers. Steaven Jones Development Co. just broke ground on a mid-size mixed-use project, including 49 multifamily units and 75,000 square feet of office space. Hankey Investment Co. is reimagining the old Marina Business Center into a multi-building office hub with flexible floorplans, 24-foot ceilings and expansive mezzanines, and Steelwave recently completed their conversion of two tired, traditional office buildings into Marina Park, a 150,00 square-foot office project, boasting roll-up garage doors and a private pocket park. Heading further east towards Ballona Creek, Continental Development Corp. is developing a 6-acre, 3-building campus offering over 155,000 square feet of brand-new ground-up creative office space. The dots are starting to connect and blocks that were once interrupted by rundown surface lots and industrial warehouses are starting to show continuity and liveliness day and nighttime alike. GlobeSt.com: Where is demand coming from? Watson: Demand is similar to the surrounding Silicon Beach market, with the majority stemming from technology, media, and advertising tenants. Already home to household names including sports apparel companies, Snap, Sony, and James Perse, start-ups such as on-demand flower company Bouqs and YouTube marketing agency Zefr are starting to take advantage of the intriguing new office options coming online. Dollar Shave Club also expanded by another 24,000 square feet and San Francisco-based Upload VR inked a 20,000 square-foot deal for their new Southern California flagship, but the biggest news is Tesla taking 131,000 square feet at Omnicom’s old headquarters next to Glen Alla Park. Even as mean local office rents have increased by approximately 50% since 2010, the high-priced adjacent submarkets enable tenants to justify the numbers. Owners are happy to satisfy these creatives’ appetites by converting older industrial and flex properties into new, character-oozing office campuses. GlobeSt.com: Are other asset classes growing as a result? Watson: The office market isn’t the only product type seeing a spike in activity in this area – the gaps are starting to fill with new multifamily projects and retail as well. More than 800 multifamily units have been completed in the last 10 years, with nearly 1,000 more proposed. Pretty compelling numbers when you’re referring to an area about a third of a square mile. With the cost of living on Angelenos’ minds, the Marina Del Rey area offers coastal new-construction living at a fraction of the price compared with Venice and Santa Monica. California Landmark is the largest multifamily developer in the area and recently broke ground on “G8,” a 230-unit project offering more than 15,000 square feet of amenities. When complete in late 2019, it will be California Landmark’s 7th project since 2006, representing more than 725 units. The supporting retail is now being buoyed by Caruso’s 133,000 square-foot Waterside at Marina Del Rey that opened in 2005 and the 200,000 square-foot Marina Marketplace. Caruso was recently awarded control of three harbor-side parcels along Admiralty Way, but no specific redevelopment plans have been announced yet. Today, all the needs and desires of local residents and tenants can be met with a short bike ride or walk down the block. Tomorrow, the options will only be more plentiful and easier to access.