Construction has begun on two new office buildings in Playa Vista, the developer announced Thursday, another sign of how tight the West Los Angeles office market has become as technology, entertainment and other businesses ramp up again.
The $220-million project, next to the hangars where Howard Hughes built his famed Spruce Goose airplane in the 1940s, is considered speculative because it has no tenants lined up in advance. But with vacancy falling below 7% on the Westside, large tenants have few options among buildings to rent.
That market hasn't been this tight since the peak of the dot-com boom around 2000, analysts say. Then, Internet-related firms snatched up nearly every empty office, especially nontraditional space such as converted warehouses and former factories.
Vacancy soared to about 20% after the dot-com crash, but now the Westside is again one of Southern California's most competitive office markets, and a few developers are testing the waters by building offices without having tenants lined up.
Harking back to the last boom, developer Lincoln Property Co. hopes to attract so-called convergence tenants, who combine technology and entertainment in their businesses and rely on creative brainpower.
"We're targeting the growing interactive businesses, like Yahoo and Fox Interactive Media," said David Binswanger, executive vice president of Dallas-based Lincoln.
The new buildings, at what will be called Horizon at Playa Vista, will be the first offices built in the campus portion where Hughes once ran his aviation empire. Two office buildings across Jefferson Boulevard to the west were completed in 2002.
The buildings are intended to match in appearance with the hangars, said architect Scott Johnson of Johnson Fain.
"They're Class A low-rise office buildings, but they'll look like industrial infrastructure," Johnson said.
To that end, the five-story buildings will be clad in metal panels in three silver tones. The two buildings underway are intended to be the first of five that will surround parking structures and a landscaped courtyard. Next door is a Playa Vista park that may be turned into a soccer field, a baseball diamond and areas for other sports.
"It's intended to appeal to Gen X and millennial children," Johnson said.
Lincoln bought the 14-acre site from Playa Vista last year for $100 million. It has graded the land and begun driving piles to anchor the first two buildings in its complex, Binswanger said.
