New offices going up in Playa Vista
Construction has begun on two new office buildings in Playa Vista, the developer announced Thursday, another sign of how tight the West Los Angeles office market has become as technology, entertainment and other businesses ramp up again.
The $220-million project, next to the hangars where Howard Hughes built his famed Spruce Goose airplane in the 1940s, is considered speculative because it has no tenants lined up in advance. But with vacancy falling below 7% on the Westside, large tenants have few options among buildings to rent.
That market hasn’t been this tight since the peak of the dot-com boom around 2000, analysts say. Then, Internet-related firms snatched up nearly every empty office, especially nontraditional space such as converted warehouses and former factories.
Vacancy soared to about 20% after the dot-com crash, but now the Westside is again one of Southern California’s most competitive office markets, and a few developers are testing the waters by building offices without having tenants lined up.
Harking back to the last boom, developer Lincoln Property Co. hopes to attract so-called convergence tenants, who combine technology and entertainment in their businesses and rely on creative brainpower.
“We’re targeting the growing interactive businesses, like Yahoo and Fox Interactive Media,” said David Binswanger, executive vice president of Dallas-based Lincoln.
The new buildings, at what will be called Horizon at Playa Vista, will be the first offices built in the campus portion where Hughes once ran his aviation empire. Two office buildings across Jefferson Boulevard to the west were completed in 2002.
The buildings are intended to match in appearance with the hangars, said architect Scott Johnson of Johnson Fain.
“They’re Class A low-rise office buildings, but they’ll look like industrial infrastructure,” Johnson said.
To that end, the five-story buildings will be clad in metal panels in three silver tones. The two buildings underway are intended to be the first of five that will surround parking structures and a landscaped courtyard. Next door is a Playa Vista park that may be turned into a soccer field, a baseball diamond and areas for other sports.
“It’s intended to appeal to Gen X and millennial children,” Johnson said.
Lincoln bought the 14-acre site from Playa Vista last year for $100 million. It has graded the land and begun driving piles to anchor the first two buildings in its complex, Binswanger said.
If the buildings are 40% leased by the time they are completed late next year, Lincoln will immediately begin work on the next two buildings in the complex, he said. Environmentally friendly building principles are being employed, and the developers will seek certification of their project from the U.S. Green Building Council.
Demand for office space is so strong that some big companies on the Westside are running out of room, said broker Carl Muhlstein of Cushman & Wakefield, who represents Playa Vista.
Sony Corp., 20th Century Fox, Yahoo Inc., Activision Inc. and First Federal Bank “are all outgrowing their facilities,” Muhlstein said. “And there is less than a handful of new office projects from LAX to Santa Monica on through Culver City and Hollywood.”
Longtime opponents of the massive Playa Vista residential, retail and business complex still hope to derail the Lincoln project and other developments there. Among them are another, larger office complex planned by Tishman Speyer and Walton Street Capital next to Lincoln’s property, on land where DreamWorks SKG once planned to build a studio.
Opponents will return to appellate court by the end of next month to continue their legal challenge to Playa Vista’s environmental impact report on its first phase, said Patricia McPherson, president of Grassroots Coalition, a group that would like to see the Playa Vista property turned into a wetland.
Playa Vista officials insist that the suit does not stand in the way of developing Lincoln’s parcel and other property in Playa Vista’s campus area.
More than 2,500 condominiums, apartments and town homes have been built at Playa Vista, most of them erected by home builders who bought the land from Playa Vista.
Playa Vista President Steve Soboroff said he expected Los Angeles developer Rick Caruso to start work on a shopping center by the end of the year.
Development of that project, along with parks and the office buildings, will complete the master plan to make Playa Vista a place where people can live and work without getting in their cars, he said.
