Top L.A. Trends in Real Estate for 2014

March 11th, 2014 by Alisa Sava

As one of the most affluent destinations in the world, Los Angeles remains top place for commercial real estate investments. In 2014, the L.A. commercial property market will continue to thrive. 

 

The growing number of tenants entering Los Angeles market as well as increasing demand for additional space coming from tech companies create flourishing opportunities for real estate investors. Moreover, entertainment and high-tech companies become increasingly interconnected, forming a new niche market and improving the overall market performance.

1Top Trends in Real Estate 2014

Top LA Trends in Real Estate for 2014

L.A. Commercial Real Estate Market Predicted to Remain Stable

 

Analysts are making positive predictions forcommercial real estate in L.A., seeing a lot of activity in both leasing and sales.

 

As a whole, the commercial market is remaining stable due to new development and mixed-use growth. The office market in Downtown L.A. is extremely active, with absorption rates rising and new construction projects finally in full operation.

 

The demand coming from tourism, entertainment and advertising industries will stimulate economic recovery in 2014. Along with creative centers, retail and medical offices will be the best long-term investments in the region.Indeed, there are a lot of opportunities in each real estate sector.

 

There are no areas I would avoid in L.A. as investors can make money in any submarket and product type, but the key is to be mindful of the targeted market and know the dynamics of the market you’re investing in,comments Darrel Levonian, the Executive Managing Officer of the Charles Dunn Company.

8Top Trends in Real Estate 2014.

Tourism, Entertainment and Advertising Industries Will Stimulate Economic Recovery in L.A.

 

The demand for apartment buildings will continue even if construction of new units whoops up. The Downtown Arts district, Hollywood, Culver City and Venice are among the most promising investment areas. They have the biggest rent growth and highest vacancy rates. Single tenant retail properties could also be a good investment option.

 

As the consumers gain more confidence in the current economic situation, they are predicted to begin spending more money at restaurants and retail shops. Recent job creation reduces vacancy rates in the office, industrial and retail sectors. According to the annual Emerging Trends in Real Estate report, nothing indicates an immediate turnaround in L.A. real estate market, but it is improving and keep moving forward.

3Top Trends in Real Estate 2014.

Downtown L.A. Is among the Most Promising Investment Areas

Hight Tech Giants Expanding Their Influence in Los Angeles

 

Technology is one of the rapidly growing business sectors in Los Angeles. Having gained the moniker “Silicon Beach,” today Los Angeles is a launching site for many multi-million dollar startups. There is no secret, that creation of new tech companies establish additional workplaces which, in turn, influence demography flows and demand for residential and multifamily housing.

 

Today, Los Angeles becomes a hub for many famous tech companies’ offices. Recently, Google has opened a 100,000 square feet campus in Venice, Microsoft has opened a 20,000 square feet office space in Playa Vista, etc. However, becoming a successful tech city doesn’t mean that Los Angeles is no longer the U.S. entertainment capital. New initiatives aim to combine tech capabilities with the established entertainment culture to provide sustainability.

 

Many famous celebrities show interest in the development of tech industries: Jessica Alba has co-founded The Honest Company; Justin Timberlake has invested into Myspace social networking service, etc. Furthermore, high tech companies can help Hollywood to take an advantage and offer new video platforms or communication solutions.

4Top Trends in Real Estate 2014.

Justin Timberlake Invested into Myspace Social Network

Entertainment Offices Are Expected to Be in Great Demand

 

New entertainment firms will need more space in 2014. With the plans to launch branded content separate from TV, such digital distribution platforms as YouTube, Netflix and Amazon need additional space for their studios. YouTube Space in Playa Vista, Los Angeles is a prototype of such creative studios. In 2014, the Hollywood market is expected to gain its momentum with the development of new entertainment offices on Sunset Boulevard and in Downtown Los Angeles.

 

 

Andrew Jennison, a founder of Industry Partners, predicts shifting the investors’ interest towards the areas with low vacancy rates and moderate prices. Santa Monica is one of those. Today, tenants tend to relocate out of initially desired locations if this promises savings in rent. Jennison also mentions El Segundo and Downtown L.A. being one of the most perspective areas for creative space development.

 

The submarket I see attracting creative tenants this year are El Segundo and DTLA. Both offer unique creative options at a very competitive price point. Businesses see the transformation and know about it and will respond to it by moving their offices there,” comments Andrew Jenison.

5Top Trends in Real Estate 2014.

Entertainment Offices Are Expected to Be in Great Demand

The creative offices’ development in Los Angeles County is expected to gain velocity in the short term, as there is still a lack of space for new companies.

 

The market is changing. The pendulum has swung from a tenant’s market. It is heating up and we are seeing a lot of activity. We are not seeing a lot of big spaces on the market and it’s limiting these companies on where they can locate,” comments Jeff Pion, vice chairman in CBRE Group Inc.

 

In fact, Downtown Los Angeles is currently one of the most dynamic districts in Southern California in terms of new construction development. Nowadays, the area has half a dozen construction cranes building new apartment units, hotels as well as officesLincoln Property Co. has purchased 425 W.11 Street in South Park with plans for redevelopment. The plan includes creation of a mix of creative and retail spaces.

 

Playa Vista, a neighborhood located on the Westsideof Los Angeles, is another perspective area where it is likely to see more deals this year. A home for one of the Facebook offices, Play Vista will continue its rise as the tech company submarket and provide more large offices for Los Angeles’ hottest companies. Five new buildings with a total value of $ 80 million are expected to break ground in March 2014. John Miller, director of West Coast operations for Tishman Speyer, believes that the presence of Youtube, Facebook and the USC Institute for Creative Technologies at Playa Vista contributes to the robust demand for creative offices.

6Top Trends in Real Estate 2014.

The Creative Offices’ Development in Los Angeles County Gains Velocity

 

Among the tenants in Downtown L.A. transforming traditional office space to creative offices is CBRE Group, Inc. This year the company will continue its “Workplace360” initiative which aims at establishingawide range of new creative offices in L.A. These offices are expected to maximize collaboration and productivity through technology, sustainability and new way of space utilization.

 

The result will be one of the most forward-thinking offices in the country, and will reflect the strategic advice that we are providing to our occupier clients who are increasingly exploring new ways to work better, smarter and more productively in an increasingly mobile, highly connected world,” comments Lewis C. Horne, executive director for the Greater Los Angeles and Orange County Regions for CBRE.

Takeaways

 

The L.A. commercial real estate market is essentially regaining its footing after significant decay caused by the banking crisis. Low interest and vacancy rates helped stabilize the market. Known as an entertainment and digital media hub, Los Angeles is now operating with a lot of tech startups ranging from e-commerce to multi-channel networks. With the positive forecast for overall real estate market, retail and office development will be the leading sectors attracting real estate investors and developers from all over the world.

 

Alisa Sava

Alisa Sava is an experienced journalist and translator of Spanish and English languages. She has studied in Spain and Poland. In her articles she is focusing on the financial analytics and real estate perspectives. She loves travelling and is passionate for Basque culture and baking.

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