What Drives Office Leasing in Emerging Markets?

LOS ANGELES—Creative office space is springing up in markets all over Los Angeles. In many of these emerging markets, which includes Culver City, Downtown Los Angeles and Hollywood, creative spaces are offered at a discount to West L.A. pricing, but price isn't the only way to drive occupancy in these markets. Landlords are also driving leasing through tenant improvements and by establishing a high-quality tenants roster, according to Tim Lee, VP of corporate development and legal affairs at the Olive Hill Group.

The Olive Hill Group recently signed a new lease at one of the firm's office campuses in Culver City. Market research and consulting firm Ipsos signed the lease for half of the 5^th floor, bringing the occupancy to 92%. “Our goal was to bring in tenants that were looking for creative office and that were looking for more of a campus feel,” Lee tells GlobeSt.com. “We were also targeting companies that were looking for more value for their money, and that would want to do a creative space build out from scratch. Those elements have been a big part of our strategy.”

Culver City is attracting tenants with rents that average $3 per square foot, as opposed to the $6 per square foot that one might pay in Santa Monica. This is driving many tech and creative companies to the market. “We think that Culver City is well positioned to turn into the next creative hub on the Westside,” adds Lee. “It is still a great value for companies coming from other markets. Creative space looks the same whether it is in Venice or Downtown L.A., so it is becoming less important about where the space is located and more about the space build out itself.”

Creating a quality tenant mix is an important key not to overlook. On Ispos' lease, Olive Hill provided “generous tenant improvements,” as an incentive for the deal, but in looking to cultivate the right mix, there were also tenants that they turned down for the opening. “I think it is important to gain critical mass,” says Lee about finding the right tenant. “Strong financials are important, but we also wanted tenants that represented the tenant mix that we wanted, which is creative, professional tenants. We wanted someone that is a little more hip staff. Our long-term vision for the space is a more creative build out, and we are seeing a lot of interest. We had a number of offers for the space, and we had to really think about the kind of tenant that we want in here.”

This is a similar strategy that Olive Hill uses in other markets as well, including Downtown Los Angeles.  “We are using a very similar strategy across out portfolio, but we are also recognizing  that the future of the millennial workforce is changing,” adds Lee.

LOS ANGELES—Creative office space is springing up in markets all over Los Angeles. In many of these emerging markets, which includes Culver City, Downtown Los Angeles and Hollywood, creative spaces are offered at a discount to West L.A. pricing, but price isn't the only way to drive occupancy in these markets. Landlords are also driving leasing through tenant improvements and by establishing a high-quality tenants roster, according to Tim Lee, VP of corporate development and legal affairs at the Olive Hill Group.

The Olive Hill Group recently signed a new lease at one of the firm's office campuses in Culver City. Market research and consulting firm Ipsos signed the lease for half of the 5^th floor, bringing the occupancy to 92%. “Our goal was to bring in tenants that were looking for creative office and that were looking for more of a campus feel,” Lee tells GlobeSt.com. “We were also targeting companies that were looking for more value for their money, and that would want to do a creative space build out from scratch. Those elements have been a big part of our strategy.”

Culver City is attracting tenants with rents that average $3 per square foot, as opposed to the $6 per square foot that one might pay in Santa Monica. This is driving many tech and creative companies to the market. “We think that Culver City is well positioned to turn into the next creative hub on the Westside,” adds Lee. “It is still a great value for companies coming from other markets. Creative space looks the same whether it is in Venice or Downtown L.A., so it is becoming less important about where the space is located and more about the space build out itself.”

Creating a quality tenant mix is an important key not to overlook. On Ispos' lease, Olive Hill provided “generous tenant improvements,” as an incentive for the deal, but in looking to cultivate the right mix, there were also tenants that they turned down for the opening. “I think it is important to gain critical mass,” says Lee about finding the right tenant. “Strong financials are important, but we also wanted tenants that represented the tenant mix that we wanted, which is creative, professional tenants. We wanted someone that is a little more hip staff. Our long-term vision for the space is a more creative build out, and we are seeing a lot of interest. We had a number of offers for the space, and we had to really think about the kind of tenant that we want in here.”

This is a similar strategy that Olive Hill uses in other markets as well, including Downtown Los Angeles.  “We are using a very similar strategy across out portfolio, but we are also recognizing  that the future of the millennial workforce is changing,” adds Lee.