Los Angeles is second in thenation for rent growth. According to the Tech 30 report fromCBRE, office rents in Los Angeles have grown 15.8%in the last two years, making it the second tech market in thenation for office rent growth, behind Atlanta and followed byOrange County. This is a significant increase from last year, whenLos Angeles was ranked 12th in the same report. Whilethis illustrates substantial growth, experts say that it was notunexpected, considering the increase in leasing activity.

“I think this was expected,” Chris Penrose,first VP at CBRE, tells GlobeSt.com. “We see what is happening withtech companies throughout the L.A. Basin, and in markets likeHollywood, which is absorbing a lot of vacancy. There are tenantsthat are taking buildings before the are coming out of the ground.Markets like Playa Vista and Santa Monica continue to be verytight, and the Arts District is now seeing tenants like Spotifytaking full buildings. All of this attributes to the increasingrent growth. It has been great to see companies are growing andplanting flags in L.A.”

Tech and entertainment tenants have been the major drivers ofoffice growth, according to Penrose. While the Westside marketsremain the hotbeds of office leasing activity, the demand—andoffice growth that comes with it—is now spilling into othersubmarkets. Downtown Los Angeles in particular has been abenefactor. “The central business district in Downtown Los Angeleshas remained flat, but the Arts District is now doing deals at$3.50 to $3.65 triple net,” he says. “Three years ago in the ArtsDistrict, there were deals getting done at $2.50 triple net, andtoday there are even proposals for $4 triple net. The rent growthin the Arts District has been significant, and with more productcoming off of the market, it is going to continue to tick up.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.