Why El Segundo’s Smoky Hollow Is the Next Creative Office Hotspot

The Smoky Hollow neighborhood in El Segundo is rapidly becoming the next creative office hotspot on the Westside. Tech startups, creative companies and light industrial users have been signing leases in the submarket, which offers significantly lower rents than nearby markets.

“Smoky Hollow has been a growing hub for creative office and light industrial tenants. The lack of new supply and demand flowing down from the Westside is driving its growth,” Erik Stiebel, an associate at Avison Young, tells GlobeSt.com. “The class-A office average asking rent here is $3.90 per rentable square foot per month full service gross making Smoky Hollow more desirable for tenants. Although the rents are up 50.3% over the last five years, they are still less than other markets in L.A., for example, the Westside is about 50% higher.”

Like much of El Segundo, Smoky Hollow was formerly a popular market for aerospace and defense companies, but in the last few years, the market has transitioned. “Tech companies and startups are choosing this submarket to grow their business,” says Stiebel. “Now the Smoky Hollow district contains creative office, research and development and industrial tenants of all sizes and types. These companies are attracted to the quiet, neighborhood feel, casual culture, less traffic, and an array of nearby employee-friendly amenities. Additionally, it offers the antithesis of a staid corporate environment.”

Many of the companies coming to the market are small but growing firms. For example, BottleKeeper recently signed a three-year 3,722-square-foot creative office lease at 219 W. Grand Ave in the neighborhood in a deal brokered by Stiebel. The move is a perfect example of the growing trend in the market. “The new lease with BottleKeeper is further testimony that growing small- to mid-sized companies find Smoky Hollow, along with the El Segundo market as a whole, a favorable place to run a business,” explains Stiebel. “While we have seen successful larger industrial-to-creative office space conversion projects in El Segundo attract companies seeking modern space, there are also smaller spaces that are in demand as in BottleKeeper’s full-building lease. This area will continue to evolve into an even more desirable market for businesses to establish roots and grow.”

The city supports the business growth, and has released a plan to develop nearly 3 million square feet of creative office, industrial and public facility buildings through 2040. “This will help keep pace with the strong demand from companies wanting to build their business in El Segundo,” says Stiebel. “Landlords are responding to the growth and demand by creative office conversion of older product.”

As more product comes to market and there is quality space available, Stiebel expects that more companies will move from more expensive markets, like Santa Monica, Venice, Marina Del Ray and Playa Vista.