Creative offices at Penn Station Studios in Santa Monica. (Industry Partners )
Companies in creative businesses that scorn traditional glass-and-steel office towers continued to rule the Westside real estate market in the second quarter as landlords scrambled to meet their demands.
While large spaces in some of downtown Los Angeles’ signature skyscrapers such as 72-story US Bank Tower lay fallow, homely old industrial buildings tricked out on the inside were in short supply, according to a report by real estate brokerage Industry Partners.
Direct vacancy in the 17.7-million-square-foot Westside creative office market was 9.2%, the lowest level since the first quarter of 2009. Much of the growth is coming from established tech and digital media companies including Google, Apple, Pandora and YouTube.
The trend is not expected to wane, because media and tech companies plan to rent an additional million square feet in the next 18 months, Industry Partners said.
As has been the case since the Internet gold rush of the 1990s, Santa Monica is the first choice for many creative firms. A shortage of available space there has helped pushed growth into nearby markets such as Playa Vista, Culver City and Marina del Rey.
The demand for creative space has caught the attention of well-capitalized institutional investors including the publicly traded Hudson Pacific Properties, which spent $89 million this year to buy an 11.5-acre collection of properties dating to the 1940s at Olympic Boulevard and Bundy Drive in Los Angeles. It plans to make them into a creative office campus.
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