Hollywood wants to be in Hollywood again.
After decades of drift, when entertainment businesses turned off by the Hollywood district's decay decamped for other neighborhoods such as Santa Monica and Burbank, many in the industry are electing to stay, expand or move in.
The latest player to commit to remain in the industry's historical home is cable giant CNN, which confirmed Friday that it planned to retain its Los Angeles bureau on Sunset Boulevard after contemplating an exit. On Thursday, Capitol Records said it would stay in its landmark tower for years to come.
Many entertainment companies believe that Hollywood has been sufficiently refurbished after years of neglect that gave the district an unsavory reputation and an undesirable address. Now, the streetscape is improving and trendy retailers, bars and restaurants are thriving.
"It's the epicenter for nightlife, and young entertainment executives from New York and Chicago would rather stay in Hollywood now than Santa Monica because that's where entertainment is in the evening," said Frank Buckley of Ramsey-Shilling Co., one of the real estate brokers who put together Capitol's deal to sell its landmark Hollywood home while agreeing to remain as a tenant.
Industry tenants have helped drive Hollywood vacancy rates below 10% in all types of office and industrial properties, brokers said, and rents were expected to rise quickly as competition for space heats up.
CNN considered moving to the San Fernando Valley or the Wilshire Boulevard corridor east of Beverly Hills before renewing its lease for the next 15 years in Hollywood, said real estate broker Robert Chavez of Guardian Commercial Realty, who represented the cable broadcaster.
CNN agreed to pay $24 million to stay in the 40,000 square feet at 6430 Sunset Blvd., home of "Larry King Live" and other broadcasts. The building is almost fully leased, said David Simon, managing director of owner Broadreach Capital Partners.
Broadreach, a Palo Alto-based investment firm, bought the 14-story building for more than $50 million this year. It is joining with CNN to make about $35 million of improvements to the public spaces and broadcast facilities starting early next year, Simon said.
"We're very bullish on the market," he said. "Media and entertainment-related companies of all sorts are trying to find homes here and it's tough right now."
Buckley of Ramsey-Shilling calculated that potential tenants, including half a dozen well-known in the entertainment business, are hunting for close to 1 million square feet to rent in Hollywood. One of his clients is Hollywood-based marketing firm Trailer Park, which is seeking an additional 150,000 square feet in the area.
Other companies are searching quietly, brokers said. Among them are divisions of Viacom Inc., corporate parent of Paramount Pictures Corp., MTV Networks Co. and Comedy Central. Also looking is concert promoter Live Nation Inc.
Part of Hollywood's appeal is its central location.
"You can get anywhere quickly from there," CNN spokeswoman Laurie Goldberg said. "So that location is quite good for a news organization."
Hollywood is still a small node among the region's entertainment industry sites, which snake almost contiguously from Burbank, Glendale and Universal City through Hollywood, West Hollywood, Beverly Hills, Santa Monica and Playa Vista, said broker Carl Muhlstein of Cushman & Wakefield, who represents many entertainment businesses.
"Hollywood has always been dead center and now it's rebounding," Mulhstein said. "It has leveled the playing field with a lot of other submarkets in terms of amenities. It's also relatively pro-growth compared to other areas."
Los Angeles' Community Redevelopment Agency said Wednesday that it had reached an agreement with the owner of a small property on Vine Street. The deal would allow construction to begin on a $500-million mixed-use residential and retail complex, including a luxury W Hotel, adjacent to the Hollywood/Vine Metro Red Line subway station. Other hoteliers are also looking for Hollywood locations, brokers said.
"It's just a funky, cool place to be," said Jeff Kreshek, who is in charge of leasing for CIM Group Inc., one of Hollywood's largest commercial landlords.
In 2000, CIM lured TV Guide Inc. into becoming the anchor tenant in a Sunset Boulevard tower, a milestone in resurging interest in Hollywood.
This summer, Technicolor Inc. agreed to lease a new six-story office tower on the Sunset-Gower Studios lot. The building won't be completed before the end of next year.
"The lights are coming back on," Kreshek said.