Ocean Avenue ranks number seven on the list of the most expensive office streets in the country, according to a new survey from JLL. Streets in San Francisco and New York fill the top two positions on the list, and Los Angeles has only one street on the list of the top 50 most expensive streets. Office tenants pay a 95.9% premium to rent space on Ocean Avenue. To find out more about this submarket in Los Angeles, we sat down with Josh Wrobel, a managing director at JLL, for an exclusive interview.
GlobeSt.com: What characteristics make Ocean Avenue one of the most expensive office markets in the US?
Josh Wrobel: First, you start with the fact that Santa Monica is one of the most desirable neighborhoods (from both a residential and office perspective) in the world. The combination of climate, beach lifestyle, access to executive housing, local amenities, public transportation and the collection of some of the area's most influential companies separates Santa Monica from most of the other Los Angeles Basin submarkets. Within Santa Monica, downtown Santa Monica's collection of jewel box buildings and access to the 3rd Street Promenade amenities draws an equally exclusive list of tenants that want to be even closer to the ocean. Finally, you go even one step further when you look at a select few Ocean Avenue buildings that have some of the only “wave breaking” ocean views in all of Los Angeles. The experience of some of the Ocean Avenue views is amazing and in a city that is built on entertainment and experiences, those views create a bidding war for the best spaces in the Basin.
GlobeSt.com: How does activity in this submarket compare to the broader L.A. market?
Wrobel: Ultimately, the Ocean Avenue mini-submarket is such a small market when compared to the rest of Los Angeles' multitude of submarkets that invariably activity in the submarket ebbs and flows, with those with the ebbs and flows primarily being driven by one simple factor… availability of space. When you look at the history of the Ocean Avenue submarket as well as the larger downtown Santa Monica submarket, it has historically had single digit vacancies with nearly 100% occupancy levels in the premier Ocean Avenue projects. As such, activity can be relatively quiet for a year, but when one of the premier projects ends up with a pending vacancy, the market always heats up since “demand” usually far outpaces the “supply”.
GlobeSt.com: What is driving rental rates up in the Ocean Avenue market today?
Wrobel: The two biggest factors in driving up rental rate in the Ocean Avenue market are the fact that (i) as noted, there is a scarcity of “wave breaking” Ocean view spaces in Los Angeles and (ii) the concentration of Douglas Emmett's ownership in downtown Santa Monica and Brentwood. Not only has Douglas Emmett cornered the market on the most prestigious buildings on Ocean Avenue, but they are also increasing demand in the market by moving their headquarters to Ocean Avenue.
GlobeSt.com: What L.A. markets are competitive with Ocean Avenue, and why?
Wrobel: Arguably, there are no markets that can truly compete with Ocean Avenue's views and experiences (as evidenced by the exorbitant rates). That said, some of the Los Angeles tenants that have looked at multiple submarkets have primarily also looked at smaller “high end” submarkets such as Venice, West Hollywood (Sunset Boulevard) and the Beverly Hills triangle as well as the elite buildings in Century City and other coastal Silicon Beach communities like Playa Vista and Culver City. Venice, West Hollywood and the Beverly Hills triangle tend to be the most competitive to Ocean Avenue because each of those submarkets have similar traits of being smaller (relatively speaking), supply constrained submarkets which have either a cachet (Beverly Hills triangle), one of a kind City views (West Hollywood) or a similar “uniquely Southern California” beach experience (Venice).
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Kelsi Maree Borland
