Tech and Media Boom Is Driving Down Vacancies in Westside Los Angeles Neighborhood
Stakeholders Say Playa Vista is Heating Up
The convergence of media and technology is helping to make a dent in vacancies in Playa Vista, a Westside Los Angeles neighborhood, and market specialists do not expect the momentum to slow down anytime soon.
Google, Facebook and Nike are joining longtime denizen Electronic Arts in taking up space in the area, filling offices in a portion of Silicon Beach that saw a rush of development in recent years.
“People want to be around successful companies,” said Ryan Patap, CoStar's director of market analytics for Los Angeles.
For instance, Facebook's lease at an office park known as the Brickyard at 12126 W. Waterfront Drive reenergized a property that once had been slow to lease.
“It came roaring back to the point now where the Brickyard, which had the largest amount of vacancy, now is mostly spoken for,” Kent Handleman, senior vice president of marketing at developer Lincoln Property Co., said earlier this week at a forum sponsored by the commercial real estate media firm Real Estate News Television, or Rentv. “So there’s very little, if any, space left in Playa Vista."
The recent activity has helped to reduce vacancy rates that have remained elevated since the Great Recession. The current office vacancy rate in the submarket that includes Playa Visa is 11%, well below the 18.5% the neighborhood reached as recently as the second quarter of 2017, according to CoStar Market Analytics.
Annual rents have been steadily rising and hit $55.57 a square foot in the second quarter, suggesting strong demand should continue, according to CoStar.
Lisa St. John, principal at commercial real estate firm L.A. Realty Partners, said she has also noticed a major change in the Playa Vista office market over the past year.
“There was a lot of space in that market,” St. John said at the Rentv forum. “It’s changed now. It’s all being absorbed.”
Google converted the wooden hangar that once housed aviator Howard Hughes' Spruce Goose airplane into creative offices. Athletic apparel company Nike is slated to lease around 53,000 square feet in WE3 at 5533 EA Way in Playa Vista, according to CoStar data.