Creative companies are starting to move into the Downtown Los Angeles market. In the third quarter, the market had 1.9 million square feet of leasing activity, with Jerde Partnership, Bullitt Studios, and Gimbal all relocated their offices to Downtown L.A, according to a new report from the DCBID. The activity pushed vacancy rates down 4.8% year-over-year to 17.6% and rents up to $3.48 per square foot for class-A space, a 4.8% increase year-over-year. To find out more about the office activity and to get a look ahead, we sat down with Nick Griffin, VP of business development at DCBID.

GlobeSt.com: Office leasing activity was very strong this quarter. Were these the types of companies that you have been looking to attract to the market?

Griffin: This was really the big story this quarter. These are four big target segments that we have been going after: tech, media, fashion, architecture. We were really please to see those companies coming in. It was particularly interesting that, geographically, they are coming into a bunch of different places. Adidas and Gimbal at going into Row DTLA, which is Arts District, but Journey is going into Bunker Hill at the CalEdison Building and Bullitt Studio is going into the fashion district. You are hitting all of the key areas as well as the different industries.

GlobeSt.com: Why do you think this surge is happening now?

Griffin: I think that we have hit a critical mass in a couple of different areas, and this is really when this starts happening. You hit this virtuous cycle when you have a critical mass of residents, which is essentially talent. One of the biggest competitive factor among these companies is competition over talent. To the extent to which Downtown has positioned itself as where those people want to be, that becomes a big draw for those companies. I think a lot of companies also want to be where their competition is, and there is an increasing critical mass of these types of companies in downtown.

GlobeSt.com: Do you think the critical mass will build momentum on its own, or are you planning more campaigns to attract these tenants?

Griffin: I think the market is doing it on its own to some extent. Last year, we had an initiative called Innovate DTLA, and that was an initiative about how downtown was becoming an innovation district. What came out of that initiative is a campaign that we are just now launching called DTLA Make It Yours. There are three basic ideas. One, downtown is a place where you go to make things, whether that is an artist or tech developer. Second, downtown is a place that you could make your own and you can build your own lifestyle here. Third, a lot of people expressed a sense of ownership and civic pride about downtown. This campaign is just starting to kick off now.

GlobeSt.com: The data clearly supports the healthy leasing activity this quarter; however, the vacancy rate in Downtown Los Angeles is still well above the city average. Do you see that number coming down?

Griffin: I have no doubt that that number will continue to come down. The thing about Downtown Los Angeles was overbuilt from the beginning from an office perspective. When they first rebuilt Bunker Hill, they built too much office. In addition to being overbuilt, there have been several recessions that have pushed the market back. In addition, the structural downsizing of the amount of space that companies need is a constant drag on the amount of space companies are leasing. The amount of square footage is significantly lower today than it was 10 years ago. Any time that we can keep the vacancy rate at these numbers, we are doing pretty well. I do think that we are hitting a tipping point where the additional space is going to be absorbed more and more.

GlobeSt.com: Office leasing activity was very strong this quarter. Were these the types of companies that you have been looking to attract to the market?

GlobeSt.com: Why do you think this surge is happening now?

GlobeSt.com: Do you think the critical mass will build momentum on its own, or are you planning more campaigns to attract these tenants?

Instant Insights /

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