Who Is Leading L.A.’s Office Boom?
Growth in the biotech market helped generate nearly 450,000 square feet of office absorption in the third quarter.
“Southern California has historically been a hotbed for biotech and life science activity,” Arty Maharajh, research manager for Los Angeles at Avison Young, tells Globest.com. “The Los Angeles market, in particular, has enjoyed a symbiotic relationship with Cambridge/Boston and the Bay Area in life sciences, engineering technology, and venture capital funding. Similar to how Harvard’s medical program and MIT have created a very important partnership, UCLA’s medical program and Caltech strategically collaborate on research as well.”
The presence of biotech firms is growing in the market, and Los Angeles and Ventura County have launched BioLA to capture even more firms. “L.A. is repositioning itself as a cancer research and treatment epicenter and hopes to usurp San Francisco and Boston as a top biotech hub seeing massive venture capital investment in life sciences in L.A,” says Maharajh. “Another recent announcement this year indicating LA’s push to be a life science force was the announcement of USC’s Los Angeles cancer institute funded by co-founder of Oracle Larry Ellison who donated $200 million to establish it.”
In addition to life science and biotech, technology, media and entertainment companies have been major contributors to office growth, especially in submarkets like Hollywood, West Hollywood, Marina Del Rey/Venice, Downtown L.A. and Burbank. “Hollywood and Downtown L.A. have by far seen the largest demand for office space use and is no surprise that these areas have some of the highest concentrations of young people,” adds Maharajh. “The talent pool from these areas has been driving employers to these submarkets. Additionally, the high rents on the Westside such as Santa Monica, Beverly Hills, Culver City, and Century City are driving tenants to look further east and downtown for lower price points in some cases.”
These industries will continue to drive office leasing through 2019. “The remainder of 2018 and 2019, for that matter, will see tech, media and entertainment, biotech, healthcare, and education growth in Los Angeles,” says Maharajh. “Millennial-centric employers are the companies growing, for the most part. The co-working concept, which has already grown exponentially in Los Angeles as in many other markets, will see landlords offer more of their buildings to this space use further driving absorption.”