Zanetos: It is both. The start-ups tend to be smaller in size. If you look at the leases, those are from larger companies. On the start-up side, there is a lot of activity from smaller start-ups, whether it is virtual reality or some other kind of tech-related content delivery platform in Los Angeles.

GlobeSt.com: Has the growth in this sector had a significant impact on the overall office market?

Zanetos: Broadly speaking, if you look at Netflix's growth has been pretty substantial in Los Angeles, and if Amazon and Apple are planning on being toe-to-toe with Netflix, there would be two other substantial companies in need of space. Greater Los Angeles is more than 200 million square feet, but tenants that need 500,000 square feet in size don't have many options. Snap Chat's commitment to 400,000 square feet in Santa Monica is a large size tenant for all of Los Angeles.

GlobeSt.com: The report shows an 11% increase in rental rates in the last two years. Do you think that the growth of these firms was a major contributor to that growth?

Zanetos: You are talking about a larger geographic area, and that stat is all encompassing. If you look at the growth that you have seen from the technology industry in that time, it has certainly had an impact. That is the timeframe when Netflix made their commitment and Snap Chat made their commitment in Santa Monica. Those were big positive absorptions by two tenants alone, and the rising tide does lift all boats. Connected to those companies, you have a lot of other companies that do business with those groups.

GlobeSt.com: The Westside and Hollywood seem to be attracting these firms. Is that still true? Which other markets are tech firms signing leases?

Zanetos: The markets that you mentioned are certainly popular. As it relates to Downtown L.A., Warner Music's commitment coming into Downtown L.A. has encouraged a number of other tenants to evaluate the market. If you were to fast forward to two quarters from now, you would have a lot of other data supporting tenants moving to Downtown than you would have today. There are small tech firms, like Hyper Loop, that are moving to Downtown Los Angeles today. They might not be a name brand, but they are doing well in that market and they are on the forefront of the trend.

J

Los Angeles has seen a recent surge in the growth of tech jobs. According to a new report from CBRE, the L.A. market is the ranked number three in the nation for tech job growth, behind Montreal and Pittsburgh. From 2015 to 2016, tech jobs have grown by 20%. From 2Q15 to 2Q17, the market also saw an 11% increase in office rents to $37.08 per foot on average. In Santa Monica, the top market for tech companies, rental rates have climbed to $71.28. To find more about the tech job growth and how it has impacted the office market in Los Angeles, we sat down with John Zanetos, SVP at CBRE, for an exclusive interview.

GlobeSt.com: Why is L.A seeing such massive growth of tech-related jobs?

John Zanetos: One of the main drivers that we are observing is the big push from Silicon Valley and the technology industries to get into the content creation and delivery business. If you look at the infrastructure and the existing talent that is here in the Los Angeles, a lot of that is built around content. With the Hollywood studios being headquartered here, a lot of that infrastructure is already built into Los Angeles. It is very recent where you have seen Amazon get into the delivery business; Apple has announced that they are going to get into the content delivery business; Netflix started in 11,000 square feet in Beverly Hills and now they are in 500,000 square feet in Hollywood; and Google putting their YouTube headquarters here. Those are the big drivers for this change.

GlobeSt.com: Are you seeing more job growth from larger firms, like the ones you mentioned, or start-ups?

Zanetos: It is both. The start-ups tend to be smaller in size. If you look at the leases, those are from larger companies. On the start-up side, there is a lot of activity from smaller start-ups, whether it is virtual reality or some other kind of tech-related content delivery platform in Los Angeles.

GlobeSt.com: Has the growth in this sector had a significant impact on the overall office market?

Zanetos: Broadly speaking, if you look at Netflix's growth has been pretty substantial in Los Angeles, and if Amazon and Apple are planning on being toe-to-toe with Netflix, there would be two other substantial companies in need of space. Greater Los Angeles is more than 200 million square feet, but tenants that need 500,000 square feet in size don't have many options. Snap Chat's commitment to 400,000 square feet in Santa Monica is a large size tenant for all of Los Angeles.

GlobeSt.com: The report shows an 11% increase in rental rates in the last two years. Do you think that the growth of these firms was a major contributor to that growth?

Zanetos: You are talking about a larger geographic area, and that stat is all encompassing. If you look at the growth that you have seen from the technology industry in that time, it has certainly had an impact. That is the timeframe when Netflix made their commitment and Snap Chat made their commitment in Santa Monica. Those were big positive absorptions by two tenants alone, and the rising tide does lift all boats. Connected to those companies, you have a lot of other companies that do business with those groups.

GlobeSt.com: The Westside and Hollywood seem to be attracting these firms. Is that still true? Which other markets are tech firms signing leases?

Zanetos: The markets that you mentioned are certainly popular. As it relates to Downtown L.A., Warner Music's commitment coming into Downtown L.A. has encouraged a number of other tenants to evaluate the market. If you were to fast forward to two quarters from now, you would have a lot of other data supporting tenants moving to Downtown than you would have today. There are small tech firms, like Hyper Loop, that are moving to Downtown Los Angeles today. They might not be a name brand, but they are doing well in that market and they are on the forefront of the trend.

J