LOS ANGELES—The L.A. Opera has signed a 27,500-square-foot industrial lease adjacent to the arts district in in Downtown Los Angeles. The company is relocating from its former arts district location, where it would have paid an additional $1.25 per square foot on rent in a lease renewal. The new lease has a 10-year term and is valued at $4.6 million, about $0.71 per square foot. The rate is standard for the market, while arts district rental rates just blocks away are more than triple the price.

“L.A. Opera's existing location is on the market right now for $2.50 per square foot triple net. This was a significant savings for them to go a couple of blocks down the street and get out of the boundaries of the arts district,” Chris Steck, a broker at Charles Dunn Co., tells GlobeSt.com. “We paid a healthy rate to the owner for this building as well.” Steck represented the tenant in the transaction, along with his Charles Dunn colleagues Chris Giordano and John Anthony. Major Properties represented the landlord, Danjon Realty.

When L.A. Opera's lease came up for renewal, they began the search for another location that fit into their budget. “We looked absolutely everywhere,” says Steck. “This was a perfect fit considering that it warehouse and office space and parking. It really checked all of the boxes, and just turned out that it was close to their previous building.”

Located at 1655 E. 14th St. in the Arts District, the property was previously occupied my the landlord. L.A. Opera plans to use it as a costume facility. It is considered an industrial flex building and also includes a second story office space. “This was a really nice, well-maintained building,” says Steck. “It was a part of two sister buildings, and the existing owner consolidated into the other building. With owner-users, there is usually a pride of ownership, so they took really good care of the property. For anything that was needed or lacking in the building, we were able to negotiate a good tenant improvement allowance to get that done.”  

Many of the industrial building in the arts district are being purchased by developers for conversion into multifamily or office space. Last year, a developer purchased the former Coca-Cola building in the arts district with plans to develop a creative office complex, paying the highest price for an industrial building at the time. As a result, the markets adjacent to the arts district are seeing decreasing industrial vacancy rates. “The market has a sub 5% vacancy, and while we were negotiating this deal there were a few other properties to come on the market that were scooped up immediately,” Steck says. “We tried to stay in front of the market, and as soon as this became available, we jumped on it.”