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Hudson Pacific wants full control of Google-leased One Westside; not sweating WeWork
CEO also tells analysts he’s not worried by WeWork’s stumbles
Hudson Pacific Properties, a real estate investment trust at the forefront of L.A.’s tech revolution, is keen to take full control of a creative office redevelopment sought by Google. If its joint-venture partner is willing to sell its stake, that is.
On a conference call with analysts on Wednesday, Hudson Pacific CEO Victor Coleman confirmed that he’d be open to the possibility of buying out Macerich’s 25 percent stake in One Westside, a former shopping mall that’s being redeveloped into a 584,000-square-foot creative office complex.
Google announced earlier this year that it leased the entirety of the redevelopment, which was formerly known as Westside Pavillion.
“We’d be more than willing to take them out,” said Coleman, noting, however, that no talks are underway and that the shopping mall investor has “been a great partner with us.”
On the call, Coleman also said he wasn’t spooked by WeWork’s sudden and spectacular downfall.
“We are not worried about our exposure in the portfolio,” Coleman said, noting that WeWork leased just 1.5 percent of its rentable office space in L.A., San Francisco, Vancouver and Seattle.
In all, Hudson Pacific inked 550,000 square feet of leases in the third quarter, and posted a 15 percent increase in revenue, the company announced on Wednesday.
More than 2.1 million square feet has been rented year-to-date, with growth drivers in the third quarter primarily coming from two major redevelopment leases in L.A.’s Arts District – Fourth & Traction and the Maxwell Coffee Building.
The Arts District is a revitalizing area that has attracted major tenants like Spotify and Warner Music. Honey, an online company, recently leased the entire 130,000 square foot Fourth and Traction property, once used as a Coca-Cola manufacturing plant. The 1924-built Maxwell Coffee Building at 405 Mateo Street is a five story, 39,000-square-foot creative office property that WeWork has fully leased.
Besides the boost in leasing activity, Hudson Pacific said it made $58.8 million from the sale of its Northern California Campus Center Complex in Milpitas, California, which included three buildings and 35 acres.
On the call, executives said that significant leases totaling more than 198,000 square feet were signed in the San Francisco Bay Area.
As for its studio business, Hudson Pacific reported higher occupancy and rental rates across all of its Hollywood studio properties. Revenue in that segment rose 15.3 percent year-over-year to $22.2 million. While occupancy across all studio properties stood at 92.8 percent, Coleman said on the call that demand remains strong. “There is very little supply today,” he said.
While the company explores other markets for studio space, such as Vancouver, Coleman said the firm’s focus remains in L.A. The company also expects to benefit, either in its office or studio operations, as major streaming services like Netflix and HBO spend billions to ramp up their content, Coleman added.
Hudson, which owns over 3 million square feet of office and studio properties in Hollywood, has leased to video-streaming giant Netflix a 13-story office project called Epic that is set to open in 2020. Hudson owns historic studio lots Sunset Bronson, Sunset Gower and Sunset Las Palmas.