What area is your expertise?
The west Los Angeles office market.
What trends do you see presently in office development in your area?
There is a dramatic tightening of the market, with rents in some specific market areas jumping by 50 percent in the last 12 months.
Who are the active office developers in your area?
Legacy Partners, Blackstone, Lincoln Property, and Tishman Speyer.
Where is the majority of development taking place?
In and around Playa vista (the Howard Hughes project)
Why is this area doing well?
This is not only where the greatest amount of vacant developable land is, but it is also near to LAX, as well as being central to the residential communities of both West Los Angeles, Marina del Rey, Beverly Hills, the Palos Verdes Peninsula and the beach communities.
What area do you expect to be the next big development market?
This market will be strong for the next 10 years because there is a sufficient supply of vacant land.
What areas are doing well in terms of office leasing?
The whole West Side.
Which areas are struggling with office leasing?
Downtown Los Angeles
Please give a measure of office vacancy rates.
The vacancy rate in the area is about 8.6 percent.
What impact do current interest rates have on the office market?
The low interest rates should help allow new projects to be built, however there seems to be a lack of construction funds for new speculative projects, and only the strongest developers are able to obtain financing in this market.
What predictions do you have for interest rates and their effect on the office market in the next year?
Interest rates should be stable, and again this will help the office market.
What is the status of job growth/(un)employment rates and what bearing will it have on the office market?
There is expected to be a shrinkage of jobs in this area due to the dramatic reductions in mortgage, real estate, and other financial sectors from the housing slowdown.
Is there any type of office tenant absorbing a majority of space?
Entertainment, Software and Gaming.
What areas will be affected?
These industries are specifically concentrated in Santa Monica, Culver City and the West Los Angeles area.
Would you like to make any additional observations about the office market in your area?
I have been in the office leasing market in Los Angeles since 1965, and with the exception of 1975 to 1980, this is the strongest office leasing market in almost 50 years in Los Angeles.
Submitted by Ted Zwicker, vice president with the Los Angeles office of Sperry Van Ness. Posted Online 05-08-08.
Ted Zwicker