Office Occupancy Quarterly Declines End in Hollywood Mid-Wilshire Market
After a mixed second quarter, the Hollywood Mid-Wilshire office market is showing an important trend. The multiple quarterly occupancy loss streak has ended, with vacancy declining by 60 basis points year-over-year, according to a market report from Colliers.
This was driven by positive absorption.
"While this did lower vacancy a bit, plenty of new inventory is nearing delivery, so vacancy will likely face renewed pressure," Los Angeles-based Colliers research manager Vincent Chang told GlobeSt.com, regarding the demand in the market.
Meanwhile, Hollywood rents declined notably amid softer demand in the media and entertainment office sector, Chang added.
Filming activity showed signs of a rebound. While Q2 data for the segment has yet to be released, the official Q1 data pointed to a 10.7% increase across Greater Los Angeles, suggesting that the California expanded tax credit policy may be beginning to drive real production growth.
"At the same time, tenants continue to hold onto their space, and investors remain active in the market, Chang said, indicating that confidence in the Hollywood submarket may be stronger than headline office metrics suggest.
Average asking rents declined 6.6% over the past year amid weaker media and entertainment demand.
Meanwhile, sublease availability of 2% is among the lowest of the major Los Angeles office markets, Colliers reported.
Bardas' Echelon projects will soon deliver, adding over 500,000 square feet of inventory and will likely spike office vacancy in Hollywood Mid-Wilshire upon completion.
King's Arch purchased 6725 W. Sunset Blvd for $13.65 million ($176 per square foot), acquiring the 59.8%-leased creative office building as a value-add investment.
Source: GlobeSt/ALM