UPDATED, 12:20 p.m., Feb. 10: Here’s what continued to drive the Los Angeles office leasing market in 2019: Technology, co-working, media and entertainment firms. But it was an outlier that snagged the biggest single deal of the year, according to The Real Deal’s analysis.
L.A. Care Health Plan, the nation’s biggest publicly-operated health plan, signed the large office lease of the year. The firm consolidated several offices into a single lease, inking a deal at Rising Realty Partners’ downtown building for more than 370,000 square feet.
Other big L.A. leases included WeWork, whose July deal at the Wilshire Courtyard close just before the company’s descent; the Walt Disney Company, Union Bank and cannabis tech firm Ghost Management.
The tech sector especially has been a big winner in the leasing race in 2019. For the first three quarters of the year, tech firms signed 1.6 million square feet of office leases, according to Cushman & Wakefield. That was followed by co-working firms, which took more than 600,000 square feet. Media and entertainment companies leased 585,300 square feet over that same three quarters. Retail firms took 417,500 square feet from January through September, which finance sector companies inked deals for 250,000 square feet.
Strong leasing activity in the Westside kept the overall Los Angeles office market steady in the third quarter, according to CBRE.
The vacancy rate in the Westside reached its lowest point since the end of 2016, according to a CBRE. Average asking rents on the Westside clocked in at $5.14 a foot per month, well over the county average of about $3.71 a foot.
Meanwhile, Netflix has remained the dominant leasing player in Hollywood for much of the year, where nearly 80 percent of space being built is already leased. Through the third quarter, the streaming service has leased or committed to taking 1.6 million square feet of office space in L.A., much of it in Hollywood.
The list of five biggest leases in L.A. in 2019 is based on TRD analysis of brokerage data as provided by Cushman & Wakefield, along with news and market reports.
1200 West 7th St., Westlake — L.A. Care Health Plan | 370K sf
L.A. Care’s lease in the Rising Realty Partners-owned buildinghttps://therealdeal.com/la/tag/rising-realty-partners/ will consolidate its staff into one location. The lease in the nine-story, 386,000-square-foot building begins in 2024. The majority of L.A. Care’s 2,000 employees are in offices a few blocks away.
The firm’s CEO John Baackes said the lease — signed in May — will allow the nation’s largest publicly-operated health plan to reduce its overall footprint by more than 60,000 square feet.
Clay Hammerstein of CBRE brokered the deal for L.A. Care, and JLL’s John McAniff represented Rising Realty.
445 S. Figueroa St., Downtown — MUFG Union Bank | 162K sf
This summer, Union Bank renewed its lease in the 40-story Union Bank Plaza, which KBS Real Estate Investment Trust II owns. MUFG Union Bank is the U.S. banking arm of Japanese Mitsubishi UFJ Financial Group.
Around the same time, KBS began its $20 million renovation of Union Bank Plaza. The building has a total of 677,000 square feet of office space and a 24,833-square-foot retail plaza.
5750 Wilshire Blvd., Mid-Wilshire — WeWork | 135K sf
Before WeWork went into its massive tailspin in the fall,https://therealdeal.com/national/tag/wework/ the co-working giant signed this lease in July, at Onni Group’s Wilshire Courtyard complex. WeWork’s lease in Miracle Mile marked its first in the neighborhood, and its 30th in Los Angeles.
The lease also gave Canadian-based developer Onni its first big tenant to sign following the firm’s $630 million purchase of the 1 million-square-foot property.
WeWork took four floors in one of the two buildings in the sprawling campus.
WeWork’s footprint in the L.A. area has grown to 2 million square feet in 2019. But mass layoffs companywide and a shift toward austerity have recently led WeWork to try to back out of some of its lease commitments. It was not clear whether any L.A. properties was on that list. https://therealdeal.com/2019/12/12/wework-tries-to-escape-leases-and-eviction/
767 South Alameda St., Downtown — Ghost Management Group | 115K sf
Cannabis industry tech firm Ghost Management Group inked this lease in June for the top three floors at Row DTLA in the Arts District.
CBRE Group Inc.’s Chris Penrose, Jeffrey Pion and Michelle Esquivel represented the landlord in the transaction. Newmark Knight Frank’s Ryan Harding and Mark Gardner represented the tenant.
Atlas Capital Group and Square Mile Capital developed Row DTLA, which has 1.3 million square feet of office space, along with 65 retail spaces. It’s an adaptive reuse project of a wholesale produce market built in the early 1920s. Ghost Management joined Adidas, the Dutch co-working firm Spaces and the advertising studio WC+A on the South Alameda Street property.
Irvine-based Ghost Management’s main brand is cannabis tech firm Weedmaps, an online platform for finding cannabis retailers.
3400 W. Olive Ave., Burbank — Walt Disney Co. | 90K sf
The Walt Disney Company signed this lease at the sprawling media office complex known as Pinnacle, near Disney Studios.
Pinnacle I and II are six-story buildings, with a combined 626,000 square feet. Disney will occupy Pinnacle I at 3400 W. Olive Ave.
Blackstone Group bought a majority stake in the company in 2017. It is located adjacent to Warner Brothers and Burbank Studios.
Correction: An earlier version of this story erroneously stated that Union Bank Plaza is owned by KBS Capital Markets Group. The plaza is owned by KBS Real Estate Investment Trust II.