March 21, 2017
Los Angeles-based office investor Olive Hill Group explores what it sees ahead for the LA market in Connect Media’s latest 3 CRE Q&A. Tim Lee shares what submarkets are poised for growth, and how owners can keep their buildings competitive.
Q: What does the office market have in store for 2017?
A: Market fundamentals point to a healthy office sector in 2017. Strong job growth, especially in the technology, digital media and entertainment industries, will continue to drive leasing activity in the year ahead. Net absorption is on the rise and vacancies are at pre-recession lows, indicating strong user demand for office space.
Los Angeles, particularly the Westside, is poised for tremendous growth, as demand for quality office space continues to outpace supply. Despite a wave of new deliveries, the LA office market remains relatively supply-constrained, making it one of the strongest markets in the country for office investment.
Q: What recent deals reflect the type of office requirements of today’s tenants?
A: The demand for creative office space is certainly growing, driven largely by office users in the tech and entertainment industries. But even beyond that, tenants across all industries recognize that the modern workplace is changing. The rise of the millennial workforce is driving this shift toward collaborative work environments with open floor plans, indoor/outdoor amenity spaces, and creative buildouts.
For example, at our creative office campus in Culver City, we’ve been investing in creative buildouts and repositioning our office space to meet the demands of our tenants. Since acquiring 200-300 Corporate Pointe last year, we’ve added Ipsos Insight, a division of the third largest market research firm in the world, and Omnia Media, a subsidiary of the international media company Blue Ant Media, Inc., one of the largest digital content producers.
Q: How are office owners staying competitive in this current market?
A: A flight to quality is underway, as tenants seek out high-caliber creative spaces that will boost their corporate image and attract top-notch talent. As a result, office owners must deliver quality in the form of flexible workspaces, lifestyle amenities, and indoor/outdoor gathering areas to help tenants compete for talent and retain their workforce.
At our office building in downtown Los Angeles, for example, we are converting the lobby into an art gallery that features artwork from the local community. We are also integrating a retail component on the ground floor, and offering on-site food amenities for our tenants to enjoy. These additional amenities will enhance the overall quality of the building, and boost occupancy.
For comments, questions or concerns, please contact Dennis Kaiser