Westside Pavilion mall converting most stores to Century City office space

The once-busy Century City Westside Pavilion has been open since the mid-1980s. But soon most of its shops will disappear.

A major renovation project will convert about 80 percent of the mall’s space into Century City offices.

One of the Pavilion’s anchor stores, Macy’s, is holding a closing sale. Nordstrom has already moved out.

The owners of the 600,000 square foot mall say it will maintain some retail space, including a movie theater and restaurants.

The move comes at a time when malls and retailers are struggling to compete with online shopping.

The renovation project will cost at least $425 million. It’s expected to be completed by mid-2021.

Century City’s office vacancy decrease while Downtown Los Angeles barely budges

Downtown Los Angeles may still be in the early stages of revitalized, but its office market is already falling behind — at least compared to Century City.

The once-struggling West LA office market saw its vacancy drop more than 5% percent between 2016 and 2017, from 14 % to 9 %. DTLA’s barely budged, moving from 16.7% to 16.3 percent, according to second quarter data.

The recent growth in Century City can be attributed largely to the growth of entertainment and tech sectors in the surrounding West LA region. As those industries grow, the professional services that serve them grow — and it helps to be a neighbor.

The Century City office space and Downtown Los Angeles are both synonymous with professionals. Century’s niche, however, is the particular services that cater to the entertainment industry, like talent representation and entertainment litigation. Downtown Los Angeles, while close to the Entertainment Studios — is far from the tech and media firm expansion happening in the West LA Silicon Beach area.

“Whether it’s Google in Playa Vista or Snapchat in Santa Monica or Sony in Culver City, the Century City sub market is seeing the spillover effects”. “Things would be very different if Google went to Downtown Los Angeles.”

Because they have long been entertainment-oriented, Century City law firms are defying the trend toward downsizing as firms consolidate nationwide.

The 35-story tower at 10240 Constellation Boulevard, for example, had two tenants recently sign expansion lease: Lakim & Watkins, an entertainment law firm, and ICM Partners, an entertainment consulting group.

“2016 was a year of re-locations and expansions in the Century City office space market,” that compared the buildings that make up the skyline in Century City to those in Downtown Los Angeles. “Looking ahead, it seems like the massive wave of relocation and expansions are over for now but tenants continue to eye the Century City office space market.”

The size of the markets also matters. The Downtown Los Angeles market has about 30M square feet of office space, whereas Century City — often referred to as the Westside or West LA office space market — only has 10M square feet.

“When you have more square footage, you have more challenges.

This does not mean, necessarily, that Downtown landlords should panic. While Century City office space rents have now hit a record high of almost $5.00 per square foot and more a month, Downtown’s skyscrapers offer a discount at $3.33 per square foot. It’s an economic alternative that many firms seek.

“Downtown Los Angeles has sold itself as the lower-cost alternative to the West LA market, and there are a lot of diamonds in the rough in the market,” “Downtown Los Angeles in the long term will be healthy, much more diverse tenant base than West LA.”

Rents rise for the Los Angeles office tenants despite an increase in the vacancy rate

The owners of the Wilshire Grand, a recently completed skyscraper in downtown L.A., are asking about $4.25 a square foot per month for office space. (Mel Melcon / Los Angeles Times)

Premium new office space coming onto the rental market is increasing average rents in Los Angeles County — even as it has driven up the vacancy rate.

Typically, a supply increase of available offices puts downward pressure on rents. But the recently completed Wilshire Grand in downtown Los Angeles and the Pen Factory in Santa Monica are lifting average rents sought by landlords, according to market observers.

“What’s coming online is premium space commanding premium dollars.”

Rents at the Pen Factory, a 1950s Papermate pen manufacturing plant that was turned into offices this year, are close to $5.00 per square foot per month.

The owners of Wilshire Grand, a recently completed hotel and office skyscraper, are asking about $4.25 a foot.

The overall average rent sought by Los Angeles office property owners in the third quarter ended Sept. 30 was $3.32 per square foot per month, up from $3.08 in the same period a year ago and $3.19 in the previous quarter.

Developers emboldened by the region’s sustained economic upturn have completed about 1.7 million square feet of new office space this year, the Los Angeles-based brokerage said.

That pushed the overall third-quarter vacancy rate in Los Angeles County to 14.4%, up from 13.3% in the same period a year earlier and 13.7% in the previous quarter.

Santa Monica, where property owners are asking for more than $6.00 a foot, commands the highest price in the Greater Los Angles area. Downtown Los Angeles is a comparative bargain at $3.47 a foot.

The local office market will continue to strengthen for the next year to 18 months presuming the economy remains strong.

“Even though we have reached full employment and leasing activity is not as robust as it was at its height in 2014 “the market is not weakening.”

Century City Office Space – World’s Top Office Markets

Century City ranks 24 of 121 global office markets with some of the most prestigious rental properties in the world.

Century City office markets is the most prestigious in the world, according to new research. CBRE’s annual Global Prime Office Occupancy Costs report ranks the market number 24 of 121, meaning that the market is competitive on a global scale in terms of occupancy costs. In Century City, occupancy costs are up 5% over the prior year. 

Is it surprising to see that Century City Office Space market ranked so high among global office markets?

Century City office space market district for the West LA and the greater Los Angeles Basin. Some of the newest and highest rent-achieving buildings are located in the prestigious Century City office market.

Why is Century City so appealing to office users?

Proximity to the Westside, Beverly Hills and the entertainment industry and executive housing for the movie industry makes Century City a very well located and desirable home for a number of high-end users.  We’re also seeing tenants migrate to Century City due to the increasing traffic impacts west of the 405.  With the $800 million renovation of the Westfield Mall completed, Century City is now home to a number of high-end restaurants and amenities, allowing it to compete as one of the most amenity-rich locations on the Westside.  Beyond its central location and strong amenity base, the quality of the buildings, prestige of address and the increasing trend of cohabitation from entertainment and professional service firms help set Century City apart from most other submarkets.

This is especially interesting because creative office is often touted as a driver of the office market, but Century City is definitely not a creative office market. What does it say about office trends in general that Century City, a very traditional class-A office market, has such a strong performance and demand?

Century City has not been traditionally known as a creative office market but we’re seeing more and more creative companies considering and moving to Century City because of the multitude of amenities, central location and some owners’ initiatives to address this shift in workplace culture.  For example, at The Plaza (1800 & 1840 Century Park East) we installed a rooftop gym, tennis court and basketball court, built locker rooms and showers, added a dog park and a large outdoor community spaces – one on the roof and one on the ground level and are offering free bike usage and free shuttle van usage. Through the addition of these amenities we were successful in attracting IPG Group to The Plaza, a 150,000 square-foot advertising company that relocated from West Hollywood.  The relocation of IPG has paved the way for other creative tenants, and we’re now seeing more interest and activity from that user base.

What are the drivers of the Century City office market, and the fundamentals compared with other L.A. office markets?

As a central business district you have a great diversity of users – from finance powerhouses like JP Morgan and Goldman Sachs to entertainment users like ICM and CAA along with a large national and regional law firm presence.  Now, with a growing a creative user base, as indicated by our latest Global Markets Research Report, Century City has become a highly desirable location for professional service providers and creative companies alike.

Latham and Watkins Open New Century City Office

In 2014, several partners left O’Melveny and Myers in 2014 to for a new entertainment group at Latham and Watkins. For more than a year, they worked in a temporary space, but have now settled into a permanent space.

The new home for the group is on the newly built out 11th and 12th floors of Constellation Place in Century City, giving them a better office space as they grow the entertainment practice from scratch.

In the new office, there is a large open common area which is surrounded by black-and- white murals of some famous Hollywood images and faces. After being in a temporary space for so long, having a permanent office helps to settle down. The space has been designed to foster community with the group, encouraging creativity and team-building similar to the way that a lot of startup and tech companies organize their offices.

One area that the practice has seen growth is with sports clients. The Latham & Watkins team has taken on work for clients such as the NCAA, doing transactional and media work for them. They are also working with Tencent, a company that partnered with the NBA to sign a large digital deal. In 2015, Latham and Watkins was the largest law firm in the world when measured by revenue, partly due to a very large client base and geography that the firm is able to cover.

Those large revenues figure to continue into 2016, as the firm is representing Legendary Entertainment, who purchased Dalian Wanda Group in January for $3.5 billion. The firm is able to balance being so large with still remaining a quality firm.

The focus on quality was evident even as the new entertainment practice was being built up. In short, they didn’t just want to have an entertainment practice in Los Angeles, they wanted to have the best one, and were willing to commit resources to make that happen. In the new Century City office, entertainment transactions and litigation make up about 85 percent of the business, with the rest of the work being for private equity clients as well as emerging companies.

Photo credit: Omar Barcena

Southern California Office Market Outlook: Spring 2015

By Century City Office Space, CEO, Century City Office Space, Corporate Advisory

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In the firat quarter the Los Angeles office market began 2015 on a brisk upswing with increased leasing and sales activity.

The Los Angeles market has shifted from recovery into expansion mode due to cheap and readily available financing. Los Angeles office market values are quickly approaching
levels seen prior to the recession.

In 2015, Los Angeles office space rates have increased due to a spike in demand  for space as unemployment in the region improves.

The seasonally adjusted unemployment rate for Los Angeles County decreased to 7.9% in January 2015 as total nonfarm employment year-over-year increased by 60,000 (1.4%). Compared to the area unemployment rate of 9.4% reported
a year ago, Los Angeles has seen steady employment growth over the past 12 months despite having an unemployment rate higher than both California (7.2%) and the nation (5.8%).

The continued growth in office using employment gains, falling vacancy rates in specific sub-markets and overall positive outlook for the economy (The Anderson Forecast projects increased growth through 2016), all contribute to the consensus for improved returns to office space as the State’s economic expansion unfolds.

In each of the three Southern California markets surveyed, Los Angeles, Orange County and San Diego surveyed, UCLA Anderson School panelists were optimistic about rental rates with a minority expecting rates to increase at about the same rate of inflation. None of the panelists expect future rental or occupancy rate weakness through 2017.

Further evidence is found in the panelist’s answer to a survey question on their actions since the previous May Survey. At that time 36% stated that they planned one or more new office project starts in the coming 12 months.

In fact 47% began new projects over the last 12 months. Looking forward 51% now state that they would begin new office space development projects over the next year with 35% (up from 9%) planning more than one new development.

Consequently the outlook, while being positive for job growth and
construction, is mixed in some Los Angeles sub-markets as owners and developers grapple with a changing environment for their products.

To conclude, at Century City Office Space in Los Angeles, we see rental rates increasing due to higher job growth and pent up demand for space, said Century City Office Space, CEO of Century City Office Space, Corporate Advisory, Inc.

Editorial Credit: UCLA Anderson Forecast 2015

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