LOS ANGELES—Office development in Hollywood is really on fire. The market has 900,000 square feet of office development under construction, most of which is creative office, according to new research from JLL. This is incredible, considering the market's proximity to Downtown Los Angeles, a market that has been looking to attract creative users. As a result, rents in the market have increased 33.5% since 2013, when the development boom kicked off. Today, rents in the market average $4.34 per square foot.

The number is huge. In fact, Hollywood and Playa Vista combined make up more than two-thirds of all office development in the Los Angeles market. The majority of the development in the market is creative office. With Playa Vista capturing Silicon Baech users, it makes Hollywood the L.A.-proper creative hub. “There are few larger, quality creative office developments being built in the desirable parts of L.A., especially with land prices soaring and the major political challenges facing developers today,” Nicole Mihalka, EVP at JLL, tells GlobeSt.com. “With tenants like Viacom and Netflix consolidating in the market, Hollywood is a proven entity for larger tenants seeking accessible, campus-oriented environments. Hollywood now joins Playa Vista as a leading submarket for development and absorption.”

The market has been evolving for years, but the real catalyst for growth was the access to public transit, which, because it is so centrally located, Hollywood already had the infrastructure. “The original catalyst was the introduction of the Metro redline at Hollywood and Highland and Hollywood and Vine,” says Mihalka. “Transit-oriented development such as the Hollywood and Highland Complex and the W Hotel project followed suit. The recent office growth was greatly influenced by an increasingly attractive workforce, affordable housing, and central location. Institutional investors, such as Kilroy, have taken advantage of these factors and have become major stakeholders and developers in the market.”

The central location has also worked in the submarket's favor, and has helped to drive demand. “Hollywood is the true center of the city , as it is strategically located between the Westside, Downtown, and the Valley,” says Mihalka. “There is a strong amenity base and a high density of quality residential product located near the major office developments. Furthermore, more millennials are living in the eastside neighborhoods of Echo Park, Silver Lake, etc. which are only a few miles away.”

Side-by-side, the Hollywood and Downtown market seem to be direct competitors. Both markets are centrally located and are developing into live-work-play environments with direct access to transit—fueling a vision of a car-free L.A. But, the Downtown market hasn't been as successful as Hollywood at attracting creative tenants, although a major lease signed by Warner Music is expected to be a catalyst. “The location is more central and there is better access to transit in Hollywood vs. the Arts District,” says Mihalka. “Creative tenants that prefer Hollywood or the Arts District generally avoid the high-rises in the more traditional areas of DTLA.”

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Hollywood Steals DTLA's Office Thunder

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