LA’s 10 biggest office leases of 2016
Looks like one of commercial real estate’s favorite buzzwords lived up to the hype. Creative office space accounted for 40 percent of all Los Angeles County leases over 20,000 square feet in 2016, according to Cushman & Wakefield’s research market director Eric Kenas. And by CBRE’s estimate, demand for creative office space in the county could reach up to roughly 44 million square feet over the new few years.
L.A. has seen more than 2.3 million square feet of new creative office space come on the market in the past three years, while 27 buildings — including the Ford Factory — have been converted into the popular open-plan office layout, CBRE reported in August.
Among those leading the open-office trend this year were Warner Music, with their pioneering move into the Arts District; Netflix’s super-sized moves in Hollywood; and ICM’s big-time upgrade in Century City. Using CoStar Group data and our own analysis, The Real Deal put together a list of the 10 biggest office lease deals by square footage inked this year.
1) Warner Music Group, 777 South Santa Fe Ave | 257,000 square feet
Warner Music Group’s 13-year, 257,000-square-foot deal at Shorenstein’s Ford Factory marked the arrival of the Arts District’s first sizable office tenant, a year after Buzzfeed backed out of a deal for the same space. Valued at upwards of $130 million, Warner’s new lease has the option of a 10-year renewal. The company will spend between $40 to $50 million building out the Ford Factory beyond Shorenstein’s remodel. CBRE broker John Zanetos, who along with several colleagues repped Shorenstein in the deal, told TRD, “It is a massive game changer.” Matthew Miller of Cresa represented Warner.
2) City National Bank 350 South Grand Avenue | 242,000 square feet
City National Bank (CNB) signed a 242,000-square-foot lease in mid-December that could expand by another 50,000 square feet or so, according to industry sources. The bank will occupy the first 11 floors of the Two California Plaza office tower and as part of the deal, the building is being rebranded as CityNational@2Cal.
Landlord CIM Group, which acquired the tower in 2014, was represented by CBRE’s Patrick Amos, John Zanetos, Chris Penrose, Todd Doney and Phillip Ruhl. Jeff Welch and Lynn Williams, also of CBRE, represented CNB.
3) Kite Pharma Inc., 2400 Broadway | 160,000 square feet
Last month, Kite Pharma closed on a lease for a 160,000-square-foot building at Boston Properties’ Colorado Center in Santa Monica. The biopharmaceutical company, which focuses on cancer treatments, will move its headquarters there. The 15-year lease has three options to extend, according to Kite’s most recent financial filings. CBRE represented Kite, and Chris Houge of L.A. Realty Partners represented Boston Properties.
4) Oracle, 1620 26th Street | 175,000 square feet
Oracle inked a deal to expand its 80,000-square-foot offices in Santa Monica’s Water Garden to 175,000 square feet in early 2016. The property, located at at 1620 26th Street, has tenants including Miramax Films and Japanese broadcaster NHK. Matthew Miller from Cresa represented Oracle, while Patti Gilbert of CBRE represented the landlord. Oracle seems to have a big appetite for Santa Monica — in November the tech giant went into contract on an office building at 2700 Colorado Boulevard for a whopping $368 million, as TRD first reported.
5) FAA, 777 South Aviation Blvd | 154,000 square feet
The Federal Aviation Administration signed a 15-year lease for a 154,000-square-foot space at 777 South Aviation Boulevard to house its new West Coast headquarters. The new digs will be located within a few miles of Los Angeles International Airport.
Bob Safai, Tony Ranger and Joe King of Madison Partners represented the landlords, Embarcadero Capital Partners and Westbrook Partners. The owners acquired the 300,000-square-foot building in 2015. Carpenter Robbins Commercial Real Estate, a San Francisco-based firm that specializes in government representation, brokered the deal on behalf of the FAA.
6) Entertainment Partners, 2950 North Hollywood Way | 150,000 square feet
Entertainment Partners leased 150,000 square feet of office space at 2950 North Hollywood Way, according to sources. The space in the triple-A office building was previously occupied by toy manufacturer Hasbro. Clay Hammerstein of CBRE represented Entertainment Partners. The privately held entity that owns the property was represented by Carol Roth, a principal with Commercial Realty Partners, who could not be reached for comment.
7) Walt Disney Company, 3355 West Empire Avenue | 128,000 square feet
The office of the happiest place on earth, home to the Imagineers working for Walt Disney Company, snagged a new lease for a 128,300-square-foot space at 3355 West Empire Avenue in Burbank. The five-story Class A building is owned by Worthe Real Estate Group and Shorenstein. Disney had previously been subleasing from Yahoo at 3355 West Empire Avenue, sources said. Brad Feld, now a vice chairman at Newmark Knight Grubb Frank, represented the landlords. Paul Stockwell at CBRE represented Disney.
8) Netflix, 5800 Sunset Blvd | 123,000 additional square feet
Netflix will chill at its new office, which, thanks to a lease signed this year, now encompasses the entire 323,000-square-foot Icon building at Hudson Pacific Properties’ Sunset Bronson Studios in Hollywood. In 2015, Netflix leased 200,000 square feet of the building at 5808 West Sunset Boulevard. In 2016, it executed an additional 10-year lease for the remaining five floors, totaling 123,000 square feet. HPP CEO Coleman told TRD Netflix paid the highest rents in Hollywood, though he wouldn’t offer exact numbers. Patrick Amos and Daniel Rainer of CBRE represented the landlord in the lease. Clay Hammerstein of CBRE represented Netflix. In addition to the office space, Netflix signed a lease for several stages at Sunset Bronson.
9) ICM, 10250 Constellation Blvd | 112,000 square-feet
Talent is moving on up this year — upstairs, that is. Talent agency ICM relocated to the top five floors of its Century City office, Constellation Place. The lease allowed the company to expand from the 93,000 square feet it had occupied on lower floors to nearly 112,000 square feet. Gary Weiss of LA Realty Partners brokered the deal on behalf of landlord JMB Realty Corporation. Mark Sullivan at Savills Studley represented ICM in the 15-year deal, which was reportedly worth north of $110 million. The 35-story high-rise at 10250 Constellation Boulevard was designed by Johnson Fain Partners.
10) Univision, 5999 Center Drive | 104,000 square feet
When CBRE Global Investors bought Univision’s office building at 5999 Center Drive for $102 million, the Spanish-language network immediately inked a lease-back agreement, allowing it to maintain 104,000 square feet in the building until 2026. Univision previously owned and fully occupied the building, which is located at Howard Hughes Center in Westchester. Gardner Ellner, director of CBRE Global Investors, handled the lease for CBRE. Univision represented itself in the negotiations.