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.”