LOS ANGELES—Generally the Los Angeles economy is finally post-recovery. That is according to Chris A. Strickfaden, senior managing director at the El Segundo, CA office of Newmark Grubb Knight Frank.
“We have seen the most growth in rental rates, user demand and price-per-square-foot sales in specific LA-area sub-markets that have catered to tech firms and tenants looking for non-traditional office space,” he says. “The submarkets we are seeing this kind of demand beyond traditional, 'vanilla' office product include Santa Monica, Playa Vista, Marina Del Rey and now as far south as El Segundo, which has seen the migration of creative and technology tenants from West LA unable to satisfy their space or economic needs.”
Strickfaden tells GlobeSt.com that specifically, “El Segundo has seen a rush of investment capital used to purchase and convert formerly antiquated buildings previously used by aerospace and other related industries.”
He notes that the desire for more creative and collaborative space has now spread to traditional industries such as finance, insurance and law. “Many of these traditional firms are re-evaluating what they want to create from an employee's user experience and the more casual office environment encourages interaction and collaboration,” he says. “Additionally, users are understanding the benefits from a cost/space-efficiency standpoint.”
In chatting with Bill Boyd, senior managing director at the Glendale office of Charles Dunn Co., we also learned that “although absorption has been slow overall in Los Angeles for office properties in the past half-decade, absorption in the Tri-Cities (Burbank, Glendale, Pasadena) office market is now at levels typical of the '90s and is exceeding the performance of other office markets in L.A. County. Glendale experienced a drop in vacancy to 15% in the first quarter of 2015 after having been at 20% a year ago in the first quarter of 2014.”
Technology has had the greatest impact on the office market both locally and on a national scale, adds Boyd. “Office buildings are being made more energy efficient to reduce total energy costs in the face of rising energy prices, while conversely, government-mandated technology upgrades to office buildings are adding to the cost of constructing a tenant's interior improvements.”
For California in particular, Boyd adds, the California Energy Code (known commonly as Title 24) requires certain energy efficient standards to be met during new office construction or for modifications including the retrofit of existing properties. “The most recent update to the code includes new requirements for energy efficient lighting with existing electrical outlets or for installation of new outlets.”
As an example, at least one electrical outlet within a duplex outlet must be now be on a "timer" and not provide a constant current, he explains. “The Title 24 requirements for interior office space construction has added from $7.00 to $10.00 per square foot to construction costs over last year due to this law.”
Continue Reading for Free
Register and gain access to:
- 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
© 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.
Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
