Tech Company Takes Sublease Space for L.A. Headquarters

Omni-channel customer acquisition company System1 has signed a 50,000-square-foot lease for a freestanding building in Marina del Rey. The space will serve as the firm’s new headquarters, relocated from the current location in Venice. System1 signed a sublease with Cresa for the space, illustrating attractive office opportunities in the sublease market catalyzed by the pandemic.

“Given the market dynamics over the past year, many spaces that were very recently constructed are available or will soon come to the market. Companies can immediately step into beautifully built out space, complete with furniture,” Gary Horwitz, executive managing director at JLL, tells Globest.com. “The time, expense and hassle associated with building out new space can be avoided with a sublease and companies can focus on their core business instead of dedicating resources to the construction of new space.” Horwitz represented System1 in the lease transaction along with JLL’s Kamil Agha and Blake Searles.

Companies are equally considering both direct and sublease office options, especially given the significant increase in supply that has come to market in the last year. Research from JLL at the end of 2020 reported a 20% increase in the sublease supply. “Whenever we put together a survey of available properties for our clients, we include both direct spaces and subleases,” says Horwitz. “Tenants are typically interested in exploring both options.” In addition, most sublease properties are moderate in size with an average of 8-stories and less than 200,000 square feet.

While the sublease supply in the market has increased overall, Horwitz says that some submarkets are seeing more supply than others. “It varies by submarket, but in general there are many attractive sublease opportunities throughout L.A.,” he says. “In El Segundo for example, there are many full floor and smaller spaces that are fully built-out that are available for immediate occupancy.”

While office tenants are pursuing both sublease and direct lease options, leasing demand in general is gaining momentum as the pandemic begins to end. “Leasing velocity seems to have picked up significantly over the past several months as companies gear up to re-enter their offices,” says Horwitz. “There is certainly some pent up demand, since many companies delayed making leasing decisions over the past year.”