Los Angeles Market Update: Office Sales and PSF Prices Partially Rebounded in 2021

Office investment sales in metro Los Angeles totaled $3.4 billion in 2021, roughly $100 million more than the previous year, according to CommercialEdge data. Last year’s deals gravitated around the metro’s ever-expanding media and film production space, with tech and medical offices also recording significant activity. Sales activity remained far below the past five-year average—$4.8 billion generated annually.

Prices in the market partially rebounded in 2021. As of December, the average price per square foot was $426, up 8.9 percent year-over-year and 45.4 percent higher than the national rate ($293). The metro still has a way to go to bounce back to pre-crisis levels ($445 in December 2019), and last year’s investment activity highlighted a route to recovery.

A total of 116 sales were recorded in 2021 (including unpublished and portfolio deals), comprising over 9 million square feet of office space across metro Los Angeles. Roughly 96.6 percent of this space had a pre-2010 original construction date, and 82.6 percent had a construction date older than 2000, with many projects slated for renovation, redevelopment or conversion (or have received it recently).

1000 Flower St., Glendale (DreamWorks Animation Studio)

The largest single-asset transaction recorded by CommercialEdge was the $326.5 million sale of the DreamWorks Animation Studios in Glendale. Brookfield Properties purchased the 459,770-square-foot asset from Ocean West Capital Partners in November. DreamWorks Animation has been the tenant since the building was constructed in 1997.

Hackman Capital Partners and Square Mile Capital agreed on a $1.85 billion acquisition of ViacomCBS Inc.’s CBS Studio Center, a 55-acre property that comprises a variety of production facilities. The mixed-use asset includes studios, office and third-party tenant space. ViacomCBS will continue to occupy stages at the site. The buyer partnership owns studio assets valued at $7.5 billion, according to its website. Last year, Hackman Capital also acquired the Sony Pictures Animation campus, located in Culver City, for $165 million.

The highest price per square foot recorded was IRA Capital’s $153.2 million acquisition of 325 N. Maple Drive in Beverly Hills, trading at $1,495. The 102,500-square-foot creative office building was 92 percent occupied by Live Nation Entertainment Inc. In 2019, it underwent a $44 million renovation.

Office investment sales in Orange County totaled just over $1.9 billion in 2021 and encompassed more than 5.9 million square feet. About 75 percent of the space that traded was situated in primary suburban areas. IRA Capital was also active in Orange County, with one of the largest sales of the year—in December, the investor paid $103 million for a 154,400-square-foot office at 2722 Michelson Drive in Irvine.

Orange County’s largest sale of 2021 was completed by Amazon. The e-commerce giant acquired a 637,500-square-foot campus for $165 million from Cerberus Capital Management. Bank of America is the current tenant of the property, situated at 275 Valencia Ave. in Brea.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here.