LOS ANGELES—This summer, despite much opposition, the L.A. City Council gave its final approval to a new zoning code that could dramatically change the appearance and general feel of the city's neighborhood landscape. The Hollywood Community Plan, approved on a 13-0 vote, changes some floor-area-ratios that will allow for taller buildings. So, should we expect skyscrapers to soon dominate the area?

Holly Schroeder, the executive officer of the L.A./Ventura Chapter of the Building Industry Association, tells Real Estate Forum that "The plan serves the city's overall goal of addressing density near transit areas." In a positive way, she says, "the plan will provide increased certainty about how future development will benefit both builders and the community."

According to David Simon, EVP of Kilroy Realty, the increased density will not necessarily accelerate growth, but he does point out that for certain sites within the market, it will allow for better and more flexible master planning. He explains that in terms of development for the area, "multifamily continues to be strong with many new units planned." Office rents are improving slightly as betterquality space commands higher rents. "Given the requirement to build underground parking with most new office developments, only select sites in the coming years will be able to justify new product."

Simon tells Forum that "The tenant make-up and user base for office in the Hollywood market is mostly creative—entertainment, media, publishing and tech companies—users that prefer to locate in low-rise campus type space where a collaborative environment can be developed."

According to Carl Muhlstein, EVP of capital markets at Cushman & Wakefield, vacancy is less than 10% in the area and there are few buildings left to renovate. "Surrounding studio lots like Paramount and Sunset Gower are experiencing higher occupancy in need of expansion," he says. He adds that concentrated along the Vine and Highland corridor, "older buildings are being renovated and quickly leased up and purchased by institutional investors—a trend not seen in decades."

According to Muhlstein, "Hollywood is ripe for higher density, especially midrise to 20-plus stories," but he says that "few are proposing taller buildings."

What would do well, from an economic perspective, according to Scott Chaplan, chairman of the Urban Group of Cos., is high-rise apartment living within Hollywood. "The area is desirable for the entertainment and related businesses, has 101 and 10 freeway access and a rich historical and nightlife fabric," he says. "The issue remains the ability to have reasonably priced rental units while constructing properties that would undoubtedly require subterranean parking, an expensive necessity to accomplish the goal."