Tech Company Expands in Santa Monica with 140,000-SF Lease

Boston Properties has signed a 140,000-square-foot lease expansion with an unnamed tech company at Santa Monica Business Park, a 1.2 million-square-foot office campus at 3100 Ocean Park Blvd.

The lease is a symbol of the viability of the Santa Monica office market, which has seen a dramatic decrease in leasing activity during the pandemic. Jonathan Lange, SVP of the Los Angeles Region at Boston Properties, said the market is still attractive for creative companies and creative talent. The property has a roster of high-profile tech and entertainment tenants.

This isn’t the only lease deal signaling renewed office demand in West Los Angeles. In April, entertainment tech company Roku signed a major lease in Santa Monica. The company inked a 10-year deal with Boston Properties for a 72,000-sqaure-foot space at Colorado Center, a 1.2 million-square-foot class-A office complex. The entertainment company was specifically looking for space to “connect, collaborate, and innovate,” according to a statement from the firm’s global real estate, and the this office property fit the bill.

Tech companies are driving leasing activity throughout Los Angeles. In Hollywood, global post-production studio Company 3 has signed a 70,285-square-foot lease at Hudson Pacific Properties’ recently-completed, class-A office development, Harlow. The lease has an 11-year term and the tenant will take occupancy in the second quarter 2022. The company already occupies the entire building at Hudson Pacific Properties’ 3401 Exposition office property in Santa Monica.

While these leases are good news for the stunted office market, research is less optimistic. A forecasting report Marcus & Millichap in May predicts challenges for the market through the end of the year. The report forecasts office vacancy will grow 160 basis points this year to 18.5%, and office rents will fall 1.4% to $37.50 per square foot. In addition, new construction is also putting downward pressure on the Los Angeles office market. There is 4.2 million square feet of new office space set to deliver in the market this year, increasing the total office inventory by 1.1%. The number is on par with deliveries from the prior two years. More than half of the new construction projects are located in the South Bay and West L.A. areas, and many are large speculative builds.