December 7, 2018 Comments (0) Views: 332 California News, Los Angeles

The Westside Evolves with Full Slate of Mixed-Use Developments

By Dennis Kaiser

Connect Westside Los Angeles’ annual gathering on Nov. 27th at the Luxe Sunset drew more than 300 attendees and included a panel entitled, Mixed-Use Development: The Evolving Westside. With projects like One Culver, 3rd Street Promenade 3.0, the Culver Steps and Ivy Station, it’s clear that tenants and consumers alike are yearning for more mixed-use spaces to occupy. Industry experts behind the biggest new mixed-use developments on the Westside shared details of some of these big projects and the market trends driving them.

Moderator Cox, Castle, & Nicholson’s David Waite framed the discussion, pointing out affordable housing is a real issue facing the market, yet real demand is coming from tech companies, as well as new TOD opportunities being generated by the city. He says, “there are a lot of interesting dynamics at play on the Westside as it relates to mixed-use development, transit-oriented development, affordable housing and investment” by companies making site location decisions in L.A. and on the Westside.

Waite notes the transit shift away from cars will take some time, though multiple options are emerging and that’s helping to encourage mixed-use development around transit nodes. He pointed out the Expo line’s promise of 4,000 to 6,000 units of housing between Culver City and Santa Monica at full implementation of the plan.

Paloma Realty Partners’ Chris Cunningham notes they get excited about are what has been labeled ‘cool kid corridors.’ These are areas where people gather before or after and event, or where Angelenos take visitors from out of town, and they typically feature an interesting draw. One such corridor on the Westside is Abbot Kinney in Venice, which is seeing institutional investor interest now due to stabilized rents and incomes. The key he says, is creating or offering “authenticity.” That element resonates with people, visitors and residents of communities alike. He says they look for “project affability” as a key indicator of what venture to pursue next.

Downtown Santa Monica, Inc.’s Andrea Korb indicated a reimagining of the 3rd Street Promenade is under way to help breathe new life into an area that was created in the 1980s and needs a redo. That plan, envisioned as Promenade 3.0, will focus on addressing the tired downtown Santa Monica area, meeting new challenges from competitors and keeping up with shifts in shopping trends to bring the 40-block area back into relevancy. Eventually, that could also include new residential or other uses being incorporated into development plans by owners across the Promenade area.

Hackman Capital Partners’ Ryan Smith reports the company is developing Culver Steps in Culver City, a mixed-use project featuring 115,000 square feet of space, including 75,000 square feet of office leased to Amazon Studios and 40,000 square feet of retail. Hackman is also redeveloping Culver Studios, a 100-year-old production facility next door to Culver Steps.

Amazon Studios took 250,000 square feet of space already, and says it will take up to 600,000 square feet of total entitled space there, bringing the facility to fully-leased. The Culver Studios project is expected to deliver in late 2020 late or early 2021.

Tenant demand is driving investment on the Westside, notes Waite, in corridors or nodes of activity.

Hackman Capital Partners’ Smith says “attrition” and lack of available space is behind the Westside renaissance. He points out the market is ultra tight, making it perhaps easier to lease a 250,000-square-foot facility on a campus environment than a 5,000-square-foot one now. That’s because there may be 30 small space options with 27 tenants seeking space, while there are two large space options with four tenants competing for the space, which means both large block options win.

Companies are making location decisions with their workforce in mind, Smith says. They plan to be in the area long-term and are making 10 to 20 year commitments. He says they are looking beyond just the price of real estate and beyond the rental rate, to consider factors such as expansion and growth opportunities, as well as things people typically look at when buying a home, including school districts or fire departments.

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