LOS ANGELES—Playa Vista and Hollywood account for the majority of L.A.'s new office construction. According to new research from CBRE, the two markets account for 67.1% of all office construction over the last decade. Playa Vista has had 1.58 million square feet of office construction between 2006 and 2016, a total of 45% of the office construction, and Hollywood has had 758,566 square feet of new office construction, accounting for 21.7% of L.A.'s construction.

“Playa Vista was the last piece of undeveloped land on the Westside. Large tenants that could not find space in Santa Monica were drawn to Playa, and for a while office space leased at a discount to Santa Monica,” Max Saia, senior research analyst at CBRE, tells GlobeSt.com. “Hollywood has been under transformation for years. Office construction did not take hold until mid-2014 because the “work” in live/work/play is usually the last domino to fall. Now these areas have become more attractive to top employers after the millennial workforce companies are seeking has moved there.”

While the markets are not geographically close, they are both targeting similar office tenants with innovative and creative-style properties. This illustrates a commonality between the markets and a clear demand for these style properties. “There is room in each market for development and both areas are in desirable locations within Los Angeles,” says Saia. “Hollywood and Playa Vista are both true live/work/play environments. Both areas have unique offerings, but they are both also highly amenitized markets with housing. Playa Vista, the last piece of undeveloped land on the Westside, is now a fully built-out community that is close to the beach, has transportation, and all the other amenities the Westside has to offer. Hollywood has a rich history and is centrally located within proximity to a large number of the popular population centers in Los Angeles, making it an attractive option as well. Much of the office space in Hollywood is still under construction and has yet to be completed but is successfully pre-leasing to large tenants.”

While these markets are behind a significant amount of the office growth, the L.A. market as a whole has a 14% vacancy rate and some markets, like Downtown Los Angeles, vacancy rates soar even higher. However, Saia says that the vacancy rate is a reflection that creative office has allowed companies to have a smaller footprint. “Vacancy rates have remained elevated during this expansion because tenants have gotten much more efficient with their space,” he says. “But new, high-quality space that meets all the growing needs of today's tenant remains in short supply, as does the supply of large blocks of quality space. This is one of the main reasons why tenants were drawn to Playa Vista and Hollywood. Any market where this need can be met will continue to see demand growth.”

Instant Insights /

These Two Markets Are Behind All of L.A.'s Office Growth

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