Submarket Snapshot: Hollywood office landlords seek high rent despite rising vacancy

The area saw the highest rents outside of the Westside in Q2

TRD LOS ANGELES /
Jul.July 14, 2016 05:34 PM

Hollywood’s office market is in a transitional phase.

It hasn’t quite filled up its new office product, hence its 24.7 percent vacancy rate in the second quarter — and a whole lot more is on the way.

The area had a whopping 622,950 square feet under construction in the second quarter, according to a report by Transwestern.

With a vacancy rate even higher than Downtown’s Bunker Hill —  which has historically been one of the submarkets with the most empty space — you’d think landlords would lower the rent in hopes of getting tenants. But that hasn’t happened. At least, not yet. Asking rent in the second quarter was $4.20 a square foot a month, according to Transwestern, making Hollywood the most expensive submarket outside of L.A.’s Westside, which averaged $4.63. The average for the L.A. metro area was $3.12.

Why not lower rents? The problem is that a lot of the empty product is new and expensive, with luxury amenities. It was pro-forma-ed for top dollar rents. Will it ultimately get them? We’ll have to wait and see, as the new product has not been sitting on the market for very long.

Hollywood saw negative absorption of 25,487 square feet in the second quarter, despite a lot of leasing activity in previous quarters. Last quarter, Netflix leased the entirety of Hudson Pacific Property’s under-construction Icon building.


Related Articles

arrow_forward_ios
Mario J. Palumbo, managing director of Seward Partners and Millennium Partners, and the site (Credit: Google Maps)

MP Los Angeles plans 14-story office development in Hollywood

A rendering of the Vine Street project (Credit: Hawkins\Brown Architects via Urbanize)

Post Group’s Matt Cooper plans offices on Vine St. in Hollywood

Hollywood's Seward House sells for $23.4M

Bardas Investment pays $23M for Seward House in Hollywood

Historic Parker Building could become a hotel (Credit: Google Maps)

Hotel developer looks to transform Hollywood’s historic Palmer Building

Amoeba Musice is moving to Hollywood Blvd. (Photo Credit: Amoeba Music)

Vinyl still rules! Amoeba Records finds new Hollywood locale

1700 North La Brea Avenue (Credit: Google Maps and Getty Images)

PNK-linked developer eyes another Hollywood hotel project

Michaekl Rapino of LiveNation, Richard LeFrak, and 7060 Hollywood Boulevard

Live Nation’s Hollywood exit leaves big hole for LeFrak

David Ryu with a Little Tokyo Galleria rendering

Under the (RE)influence: Councilman’s campaign funds scrutinized

arrow_forward_ios
Loading...