JPMorgan Selling 1.4M SF Santa Monica Office Campus
Water Garden goes on market as LA office availability hits record 25%.
JPMorgan Asset Management has put its 1.4M SF Water Garden office campus in Santa Monica up for sale.
An asking price has not been disclosed for the 17-acre campus, which includes eight six-story office buildings that are 84% occupied, with tenants including Amazon and Sony.
Eastdil Secured is listing the property, which was acquired by JPMorgan in 2001. Water Garden is the largest Westside office campus north of Interstate 10, featuring a series of waterways surrounding the office buildings.
In May, Amazon inked a 200K SF lease at the campus. Software firm Oracle leases 290K SF at the campus and Entravision has a 145K SF footprint at the landmark office complex.
JPMorgan completed a $50M renovation at the campus in 2016. The complex includes a fitness center, daycare center, bank outlets and several restaurants, as well as parking for more than 4,000 vehicles.
While net absorption treaded water in the Los Angeles office market in the third quarter, vacancies climbed to a record of 20% and available sublease space surged to a new high of 10.7M SF, which is nearly 5% of the current office inventory, according to Newmark’s Q3 report for the industry.
Newmark said cost-cutting measures by the tech sector is inducing tech players to reduce their office footprints in LA.
“Most tech company valuations have suffered notable losses in recent month. This is leading to cost-cutting measures, notably among firms that aggressively staffed up in recent years and exponentially grew their real estate footprints,” Newmark’s report said.
Notable sublease listings added in Q3 included Honey, with 132K SF in DTLA; Netflix, which listed 121K SF in Burbank—increasing the streaming giant’s sublease total in LA to 188K SF; and Herbalife’s listing of 98K SF in DTLA.
The market report indicates there are likely to more sublease listings added to the total in Q4. “Hiring freezes, slowdowns and layoffs are on the race,” Newmark said.
The only bright spot in the market report—and it’s barely a glimmer—is that net absorption in LA’s office sector leveled off at negative 2K SF in the third quarter, an improvement over the absorption amount of negative 261K SF in Q2. This was overshadowed by the surge in sublease space in Q3.
“Sublease availability has more than doubled from pre-pandemic levels and finding a tenant to backfill the average sublet offering is difficult amid a crowded [sublease] market,” Newmark’s report said.