Biotech and life science firms energize L.A.’s office real estate

L.A. County notched 450,000 sf of office absorption in third quarter

Warner Center office space in Woodland Hills, where Anthem Blue Cross signed for 170,000 square feet
Warner Center office space in Woodland Hills, where Anthem Blue Cross signed for 170,000 square feet

Entertainment and technology are not the only industries driving the boom for office space in Los Angeles.

New research shows that L.A. County absorbed nearly 450,000 square feet of office space in the third quarter, much of that due to increasing demand from healthcare, biotech and life science industries in the South Bay and northern submarkets.

The third quarter numbers bring year-to-date absorption to 600,000 square feet for the county, according to Avison Young, a global real estate services and research firm.

Fueling the third quarter numbers was Anthem Blue Cross’s signing for 170,000 square feet in Woodland Hills. This deal pushed new leasing activity to 1.7 million square feet year-to-date, slightly outpacing the amount recorded this time last year, according to a report released this week by Cushman & Wakefield.

These industries will continue to drive office leasing through 2019, according to Avison Young, especially considering Ventura County-based Amgen recently said it will partner with Los Angeles County to sponsor a biotech organization called BioLA, which is intended to foster more growth of the life sciences industry.

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In Glendale, CIGNA Healthcare did a direct renewal of 61,665 square feet at 400 N. Brand Blvd. The Children’s Hospital of LA also inked 25,384 square feet more space at 800 Brand Blvd.

With sectors like science, technology, engineering and math experiencing high employment, Avison Young firm predicts an increase in rental rates and steady leasing activity, especially for tech companies in biotech industries.

Technology and media entertainment firms have also contributed substantially to office growth, especially in places like Hollywood, West Hollywood, Venice and Downtown Los Angeles. Los Angeles County office vacancy decreased to 14 percent during the third quarter, Cushman & Wakefield added.

Greater Los Angeles’ average asking rental rate of $3.35 per square foot per month remained relatively flat from last quarter, up $0.03, Cushman & Wakefield reported. The largest sales transaction in the quarter was the sale of Santa Monica Business Park, with Boston Properties paying $627.5 million to Blackstone to acquire the property.

In West Los Angeles, Standpoint Capital paid the most per square foot for an office property, spending $193 million to pick up 433 North Camden Drive in Beverly Hills from Camden Properties. The quarter’s largest single building sale by square feet was in Glendale, where Goldman Sachs & Company spent $93.5 million, or $290 per-square-foot, for 505 North Brand Blvd.