Top LA Real Estate Scenarios for 2021 – Business Observer
It has been a bizarre year to say the least for commercial real estate in Los Angeles.
It was all fun and entertaining for everyone in the studio industry, who saw record demand from tenants and investors, while the e-commerce industry propelled a record demand for warehouse space from manufacturing and distribution. But for offices and retail, it’s been a roller coaster year. California was still largely closed for business at the start of the year since the initial pandemic shutdowns, and then the delta and omicron variants further disrupted a mass comeback in the office.
Now, as the year draws to a close, we can reflect on the most important offers and trends that have taken us to the finish line.
No business like show business
The famous streaming wars blow up Hollywood. Netflix, Apple, Amazon and Disney are all growing their footprint to expand their catalogs, and owners and investors are taking advantage.
The joint venture of Hackman Capital and Square mile led the way in 2021 from afar. The joint venture started the year by acquiring Raleigh Studios in Hollywood and Sony Pictures Animation Campus in Culver City, then announced a $ 1.3 billion redevelopment to the historic Television City studios. Then, in the biggest deal of the year for LA, the joint venture bought CBS Studio Center from ViacomCBS during about $ 1.85 billion. Not too bad for a year of work.
Other institutional production companies are also benefiting from the surge in demand. Warner Bros. announced this year that it is selling the historic Ranch Studio, and will rent the property after a huge $ 500 million expansion by the new owners Worthe real estate group and Stock Bridge. Brookfield also acquired the seat for DreamWorks Animation from Hana Asset Management and Ocean West Capital Partners This year.
And there was also a slew of newcomers to the studio scene in 2021. Bain Capital Immobilier and BARDAS investment group filed plans with the city for the construction of a $ 450 million Hollywood soundstage project, and Atlas Capital Group filed plans with the city to redevelop a downtown property into a $ 650 million Hollywood-style studio plot with 17 sound stages and 212,300 square feet of office space.
Interest of industrial size
Have you ever heard so much about “supply chain issues” before the past 12 months?
The ports of LA and Long Beach set new wire-to-wire import records this year, and the Southern California industrial market continued to grow at a record pace. Just three quarters of the year, the United States closed $ 36.6 billion in industrial real estate sales and, according to CommercialEdge, three counties in Southern California combined for more than 15 percent of that total volume.
Despite bringing millions of square feet to market this year, production has not kept pace with demand, and the industrial vacancy rate in the Inland Empire of Southern California has plummeted. below 1 percent. So the owners like Rexford Industrial Real Estate acquired more than $ 1.6 billion in real estate this year, while large e-commerce tenants like Amazon continue to expand their footprint with significant leases.
Perhaps the best example came in October when an Amazon warehouse was sold just a year after being converted from office space to 800 percent more than its previous sale price in 2020.
A place to work, if you can keep it
It’s been a tense year for real estate at work as a mass back to office never materialized. Fortunately, LA is uniquely positioned to break major lulls in the leasing market due to thriving tech, entertainment and creative industries.
The first big lease of the year came when the plant-based food company Beyond the meat signed a 12-year contract move its head office to Hackman Capital Partnerspopular office redevelopment in El Segundo.
In the spring and summer, more and more big names have tense their muscles. Snap inc. extended its head office lease on a 1.2 million square foot creative campus in Santa Monica. Hulu enlarged its offices at 351,000 square feet with a new seven-year lease at 15 acres Central Colorado, which is the same campus where Roku signed for 72,000 square feet. And Creative artists agency – one of the preeminent representative firms for actors, athletes and musicians – also renewed its lease in Century City for nearly 300,000 square feet.
And, for better or for worse, more are on the way. At the start of the year, the LA City Council approved Onni Group‘s Times Mirror Square project across from downtown City Hall, which will add 307,300 square feet of office space to an already strong pipeline.
Gregory Cornfield can be reached at [email protected].