SPECIAL REPORT: Hollywood

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While downtown L.A.’s Arts District has received a lot of recent fanfare, Hollywood remains the core of the entertainment industry and the place most sought after by tenants and investors. During the fourth quarter, rents continued to trend upward. Currently, existing Class A office space in Hollywood is renting for more than $4.25 a square foot with incoming product exceeding $5 a square foot, historically unprecedented in this submarket. Creative office space remains in strong demand with entertainment, clothing and technology companies as well as entrepreneurs with new concepts. As the rental market tightens, land is at a premium for new projects, causing stiff competition among office and multifamily developers. In fact, most office developers are getting priced out of acquisitions with multifamily real estate investment trusts willing to pay more than $500 a square foot. Investors continue to be interested in the Hollywood Media District, which is becoming an epicenter for art and design, but product rarely hits the market because most properties are owned by long-term private investors.

Nicole Mihalka is senior vice president in the downtown L.A. office of Jones Lang LaSalle.

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