DTLA, The Best Value Play in SoCal

LOS ANGELES—Downtown Los Angeles is the best value play in Southern California, and maybe the nation, according to Mark Sullivan, EVP, director and regional manager at Savills Studley. His advice to clients—or anyone looking for quality office space at a discount—is to get into the market now and make a long-term deal, while rental rates are still low and landlords are offering substantial concessions to move in. Creative tenants are the best positioned to take advantage because landlords, especially of institutional quality buildings, are trying to attract creative users. Sullivan recently sat down with us to discuss the market and why this is a great time to make a deal there.

GlobeSt.com: Why is now a good time to make a deal in Downtown Los Angeles?

Sullivan: While the markets around Downtown have spiked, Downtown rental rates have only grown modestly and concession packages have grown dramatically. I think that tenants Downtown are thinking that this is a good time to price their long-term future because the market has been flat and other markets have moved. As an insurance policy against institutional buildings being discovered by technology companies and given a badge of approval. We are finding a lot of our clients are saying that it is a good time to go long and protect their long-term future.

Downtown is the value play in all of Southern California. There is no greater value in super high quality real estate, and there may be as much value in the Downtown market as any major market in the country. The rental rates and concessions paired with the concessions that you will enjoy, I don't know that there is more value any place in the country.

Aside from the value, why is Downtown Los Angeles a good market for office tenants?

Sullivan: Transportation Downtown has improved greatly. It has everything there. It is just the same stale tenant population, and it is not a dynamic population. The tenants Downtown have always been loyal to Downtown. They just haven't been growing at a dynamic rate. That has created great value and a real terrific opportunity for the existing tenants that are Downtown or someone that is thinking about Downtown.

GlobeSt.com: How do you know when demand is beginning to shift in a market?

Sullivan: One of the things that we track is subleasing. The volume of subleases entering the market is sometimes a bellwether for what is going to happen. Subleasing activity and subleasing availability have increased quarter over quarter, and that usually signals that the demand for space is changing. I don't think that it is an immediate change in demand, but it is a change. We also look at the speed at which deals happen, and another bellwether is that when deals take longer to make, it suggests that there is likely going to be an impact on demand.

LOS ANGELES—Downtown Los Angeles is the best value play in Southern California, and maybe the nation, according to Mark Sullivan, EVP, director and regional manager at Savills Studley. His advice to clients—or anyone looking for quality office space at a discount—is to get into the market now and make a long-term deal, while rental rates are still low and landlords are offering substantial concessions to move in. Creative tenants are the best positioned to take advantage because landlords, especially of institutional quality buildings, are trying to attract creative users. Sullivan recently sat down with us to discuss the market and why this is a great time to make a deal there.

GlobeSt.com: Why is now a good time to make a deal in Downtown Los Angeles?

Sullivan: While the markets around Downtown have spiked, Downtown rental rates have only grown modestly and concession packages have grown dramatically. I think that tenants Downtown are thinking that this is a good time to price their long-term future because the market has been flat and other markets have moved. As an insurance policy against institutional buildings being discovered by technology companies and given a badge of approval. We are finding a lot of our clients are saying that it is a good time to go long and protect their long-term future.

Downtown is the value play in all of Southern California. There is no greater value in super high quality real estate, and there may be as much value in the Downtown market as any major market in the country. The rental rates and concessions paired with the concessions that you will enjoy, I don't know that there is more value any place in the country.

Aside from the value, why is Downtown Los Angeles a good market for office tenants?

Sullivan: Transportation Downtown has improved greatly. It has everything there. It is just the same stale tenant population, and it is not a dynamic population. The tenants Downtown have always been loyal to Downtown. They just haven't been growing at a dynamic rate. That has created great value and a real terrific opportunity for the existing tenants that are Downtown or someone that is thinking about Downtown.

GlobeSt.com: How do you know when demand is beginning to shift in a market?

Sullivan: One of the things that we track is subleasing. The volume of subleases entering the market is sometimes a bellwether for what is going to happen. Subleasing activity and subleasing availability have increased quarter over quarter, and that usually signals that the demand for space is changing. I don't think that it is an immediate change in demand, but it is a change. We also look at the speed at which deals happen, and another bellwether is that when deals take longer to make, it suggests that there is likely going to be an impact on demand.