If you just looked at the biggest deals, Los Angeles’ office leasing market would seem to have done just fine in 2020.
The five largest office leases inked in the county totalled nearly 950,000 square feet, an increase from last year’s top-five total of 730,000 square feet.
The largest deal of all, as well as the largest new deal, both went to entertainment giants in Burbank’s Media District. Disney renewed 425,000 square feet and Netflix inked a new 171,000 square feet lease. An advertising agency, an engineering firm and a government agency filled out the rest of the top five.
Nonetheless, the big picture for the region’s office market has been grim. New leasing volume in the third quarter was 18 percent lower than the quarter before, and down 61 percent year-over-year, according to a recent Savills report.
About 20 percent of Los Angeles’ total office space is now available for lease, an eight-year high, according to the report. The amount of sublease space increased by 50 percent since the start of the pandemic, to 7.1 million square feet.
Among submarkets, Burbank was a notable outlier with an availability rate of just 6 percent at the end of the third quarter. Other major submarkets, like Downtown and Santa Monica, had availability rates slightly above the countywide average.
TAMI (technology, advertising, media, and information) tenants accounted for 60 percent of leasing activity in the third quarter, and about half of all leasing volume came from new deals and the other half from renewals and extensions.
This list of the five biggest leases in L.A. in 2020 is based on TRD analysis of brokerage data as provided by Newmark and CBRE, along with news and market reports.
1. 3800 W Alameda Avenue, Burbank | The Walt Disney Company | 425K sf
The Walt Disney Company renewed its 425,000-square-foot lease at 3800 W Alameda Avenue in November. According to ratings documents, Disney’s lease at the building was set to expire next year. The space serves as the world headquarters for Radio Disney and the broadcasting base for the Disney Channel, as well as a backup for East Coast operations including ESPN.
3800 Alameda is part of a portfolio of Burbank office buildings in which Blackstone acquired a majority stake in 2017. Santa Monica-based Worthe Real Estate Group retains a minority stake in the buildings and manages them. Within the same portfolio, Disney’s film production arm Walt Disney Pictures occupies another 150,000 square feet at the Media Studios complex.
2. 2525 Colorado Avenue, Santa Monica | Rubin Postaer & Associates | 187K sf
Advertising and marketing agency Rubin Postaer & Associates renewed the 186,894-square-foot lease for its headquarters at the Colorado Center in Santa Monica in January. The lease was originally set to expire in 2025 and now extends through 2033, according to Trepp.
The six-building, 1.2 million-square-foot office complex is owned by Boston Properties and TIAA. Boston Properties acquired Blackstone’s 50-percent stake in the property for $511 million in 2016, marking the office REIT’s first acquisition in Los Angeles.
Savills represented the tenant in the transaction, while LA Realty Partners and Cornerstone Real Estate brokered the deal for the landlord.
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3. 2300 W Empire Avenue, Burbank | Netflix | 171K sf
In the biggest new lease of 2020, Netflix inked a 171,000-square-foot deal in September for its first dedicated animation studio at Burbank Empire Center’s 2300 W Empire Avenue.
The property is owned by the real estate investment arm of New York Life and managed by Lincoln Property Company. The streaming giant’s new space includes the entire first floor and spaces on three other floors of the seven-story, 351,300-square-foot building.
CBRE, which represented New York Life in the deal, says the building is now fully leased. New York Life Real Estate Investors bought the property in 2017.
4. 8500 Balboa Boulevard, Northridge | Harman International | 164K sf
Engineering firm Harman International renewed its 163,921-square-foot lease at 8500 Balboa Boulevard in Northridge in October. The company, which has been at the building for 30 years, was acquired by Samsung in 2016 and now functions as an independent subsidiary of Samsung Electronics. Harman’s products include “connected car technology” and audio electronics.
Savills represented the tenant in the deal, while CBRE represented landlords Shubin Nadal Realty Investors and DRA Advisors, who acquired the 900,000-square-foot office, industrial and retail property in 2014. Facebook also has a 80,000-square-foot office at the building.
5. 233 S Beaudry Avenue, Downtown | Los Angeles Department of Water and Power | 132K sf
The Los Angeles Department of Water and Power, the nation’s largest municipal utility, inked a long-term lease for 132,000 square feet at 233 South Beaudry Avenue in Downtown Los Angeles in May. The cost of the 10-year lease, which was approved by City Council, is $72.5 million, and the department has planned an extensive buildout for the property.
The building is owned by Michael Delijani, son of the late L.A. real estate investor Ezat Delijani. Delijani’s Delson Investment Company owns multiple commercial and residential properties downtown, including one nearby at 136 South Beaudry Avenue.