Westside Los Angeles Evolves and Expands

Increased tenant demand and a steady pipeline of new development continues to grow and evolve Westside Los Angeles. Once overlooked, the Westside has transformed into one of the hottest submarkets in LA, and become a destination for live, work, and play.

Connect Westside Los Angeles is coming up December 13th, 2017 at Luxe Sunset Boulevard. A strong line-up of Westside LA power players will share what is driving this market. One such panelist, Equity Office’s Lisa Picard, offered insights into the hottest submarkets, where to look for deals, what tenants demand and what’s ahead in 2018 in our latest 3 CRE Q&A.

Q: What are the primary trends you are tracking, especially relative to Los Angeles’ Westside? What’s driving the market?

A: Equity manages Blackstone’s office investments in a diversity of markets across the U.S. Generally, we look at patterns of growth that give us indications for how Los Angeles will react in the future based on what we see here and elsewhere. Like most, we are observing constraints to supply and sizable growth by the tech sector in its consumption of space for content creators, media related businesses and the technology that supports them. Our experience in high growth tech-centric office markets, users have an extreme need for flexibility, speed of delivery and offices that have a recruiting angle (e.g. location, story amenities). For those properties that address these trends, strong absorption and rental rate growth is expected.

Q: How do you think those factors will play out in the coming year?

A: We don’t see the supply equation changing anytime soon. We do see the tech titans’ race to control content continuing to drive demand in West LA. As labor markets tighten further, talent will be tougher to find. Therefore, attracting talent into Los Angeles over stealing it from other companies will be critical for continued growth. And other technological advancements in quantum computing, AI and Mixed Reality will increase demand for content. If these dynamics continue, we see these pressures driving rents, pushing demand into new markets, that are traditionally lower priced and will have the ability to attract talent (i.e. housing and work).

Q: What submarkets or property types do you think will perform well? What do you like about the Westside and why?

A: Personally I’m not well versed in understanding the Westside as deeply as others. However, given the trends noted above, anything that continues to have good accessibility/ transportation options (as that is like to change with technology) and a perception of high quality lifestyle will do well. The trick is seeing where some of the big demographic shifts will also adjust lifestyle needs; namely having hip new restaurants, bars, clubs are secondary to now having good schools, community centers and open spaces.

For comments, questions or concerns, please contact Dennis Kaiser