Los Angeles Market Update: Creative Office Leads Construction Activity

As of July, Los Angeles had 8.2 million square feet of office space under construction, 2.9 percent of total stock, CommercialEdge data shows. Month-over-month, construction activity decreased by 10.8 percent, from the 9.2 million that were underway in June. Construction volume is relatively on par with last year’s levels, with a 2.5 percent increase year-over-year.

No new office properties were added to the pipeline, which is largely comprised of projects that broke ground before the global health crisis got underway. Of the total square footage underway, over 6.2 million square feet of office space is slated for completion in 2021. If projects remain on track without delays, this year will surpass 2020’s activity—when 2.3 million square feet was completed—by 169.5 percent, and even 2019 levels—when just over 3 million square feet came online—by 106.6 percent.

Creative office continues to be at the forefront of construction activity, with developers racing to provide unique workspace experiences as the office landscape continues to shift towards a more agile profile. Meanwhile, large adaptive reuse and redevelopments are also underway, like the reimagining of The Herald Examiner Building at 1111 S. Broadway. Virtually all projects in the CBD are redevelopments, totaling about 3.2 million square feet of office space.

Three office properties came online in July, totaling 603,489 square feet. Kilroy Realty finished construction of On Vine South and On Vine North & The Studio, a 3.5-acre mixed-use project fully leased to Netflix. The On Vine campus comprises three low-rise office buildings, a 20-story residential tower, a studio production theatre and 13,000 square feet of retail space. No other projects were underway in the Hollywood submarket. In North Hollywood, however, work is underway on NBC Universal’s 331,000-square-foot campus. Construction activity started earlier this year and the project is slated for a 2023 completion.

In the West Los Angeles submarket, GDI Cos. completed an adaptive reuse project at 10730 W. Pico Blvd. West End is a redevelopment of a 1964-built Macy’s department store, transformed into 230,000 square feet of office space. The three-story building features approximately 20,000 square feet of retail, a three-level courtyard and floorplans designed for flexibility.

Apart from the CBD’s redevelopment boom, other submarkets with a high volume of construction activity are Culver City, with more than 893,000 square feet underway; El Segundo with 592,000 square feet of office space; and East Los Angeles, where 568,000 square feet are under construction.

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