Industry Dirt: Fall Edition

Pumpkin spice lattes are back, and so am I. I have another packed Industry Dirt, which includes some promising production activity news, an update on the Jim Henson Company Lot, and a look at what’s going on in the Culver City office market. Plus, lots more.

Let’s go!

-Ted Simpson

CRE NEWS AROUND TOWN

LEASING ACTIVITY

Toymaker Mattel, which originated the intellectual property behind the movie “Barbie,” will relocate its studio operations to a 60,000 square foot office at Continental Development’s Continental Park campus at 831 South Douglas Street, El Segundo. Mattel will move into its new office by next year. Hot off Barbie’s success, Mattel is working on other films based on Mattel toys, including a Hot Wheels movie to be produced by J.J. Abrams, a Masters of the Universe film, and a Monsters High film. The Continental Park lease represents the company’s second office deal of the year. This summer, Mattel bought the Grand + Nash office campus at 2160 East Grand Avenue, next to its El Segundo headquarters, for $59 million, or $351 per square foot. The toymaker will use the 168,000-square-foot building for a design center. (source: The Real Deal)

Legendary Entertainment renews its 89,749 SF lease at 2900 W Alameda Ave, Burbank. Legendary Entertainment has occupied space in The Pointe since 2013, according to CoStar records. (source: Costar)

Dan Lin’s former space, Ridebeck Ranch, at 1660 Beverly Blvd, Los Angeles (located in Historic Filipinotown), has been leased to Partizan. We featured the space in our June issue.

Park County — a media and hospitality company known for producing the animated TV show "South Park" and Broadway musical "The Book of Mormon," as well as for reviving the Casa Bonita restaurant in Lakewood, Colorado — signed on to take over this entire creative 18,447 SF office property at 2230 Broadway, Santa Monica, for a five-year term. The property was constructed in 1948, and this lease deal puts the privately owned property at full occupancy. (source: Costar)

Concord, a Nashville-based independent music company that supports more than 125,000 artists and songwriters globally, signed a new 32,000-square-foot office lease at Wilshire & Palm in Beverly Hills. Wilshire & Palm is located at 9171 Wilshire Blvd. Concord’s team will occupy the entire sixth floor and penthouse, which will consist of indoor and outdoor work offerings. Concord is scheduled to move into its new space in the third quarter of next year. (source: LA Business Journal)

SALES ACTIVITY

John Mayer and McG have agreed to purchase the historic Jim Henson Company Lot at 1416 North La Brea Avenue in Hollywood for $40 million from the Henson family. The 5-acre property, which includes A&M Studios, will be redeveloped after Mayer and McG negotiated the deal for several months, though the buyers' plans for the site remain unclear. There was speculation that the Church of Scientology, already a major landlord in the area, was closing in on a bid. Word on the street is that Ron Burkle and Irving Asoff were the money behind the buyers. The use is “music.” The Henson Company will relocate to an undetermined amount of space. (source: Traded)

Sable Ranch, a nearly 400-acre filming location in the Santa Clarita Valley that has hosted shoots for dozens of films and TV shows over the past five decades, including Sons of Anarchy, SWAT, American Horror Story and the upcoming The Accountant 2, has been put up for sale for $35 million. The property, comprising the adjacent Rancho Maria and Sable Ranch lots, sits just off the 14 Freeway and Sand Canyon Rd near Coyote Canyon, and features a “Western Street” and multiple rustic facades that have been used for features, scripted and unscripted TV series and commercial shoots. In addition to its set buildings and canyon and grassland locations, it also features two on-site helicopter pads. (source: Hollywood Reporter)

Dolby Theatre in Hollywood sells to producer-led ownership group, JEBS Hollywood Entertainment. Built in 2001 and home of the Academy Awards since 2002, the 3,400-seat theater totaling 180,000 square feet is located at 6801 Hollywood Blvd and is within the surrounding Ovation Hollywood retail complex, which sold in 2019. The acquisition for an undisclosed sum also included two surface parking lots totaling 1.45 acres. JEBS Hollywood Entertainment is led by producer Elie Samaha and includes Sherwin Jarol, Jeff Sagansky, Jonah Lazowski, Two Girls Holdings, LLC, and Sheikh Abdulla Bin Mohamed Al Qasimi through his investment firm, Master Investment Group. The seller was the California Public Employees’ Retirement System. (source: Connect CRE)

CREA’s CULVER CITY SUBMARKET BREAKDOWN

In a nutshell, here’s what you need to know about the Culver City submarket:

1. Vacancy spike (see chart).

2. More new office under construction → cause of vacancy spike.

3. Apple continuing massive expansion (see below).

4. Traffic is making the area less desirable. Not too long ago, the well-positioned submarket was easy to get in and out of.

5. Rents are predicted to move sideways for the next several years while the vacancies remain high.

Culver City tenants continue to vacate spaces upon lease expiration, downsize footprints, and post space on the sublease market. As a result, the submarket witnessed -250,000 SF of net absorption during the past 12 months. Today, 5.3% of the submarket's total office space is available for sublease, one of the highest percentages of sublease availability among Greater L.A. submarkets.

Due to the area's ability to attract tech and creative companies, the area has been a relatively active location for construction in Greater Los Angeles. Around 1.5 million SF net new space was delivered in the past five years, increasing total office space in the Culver City Submarket by around 15%, well above the 2% increase in space seen market-wide.

Around 170,000 SF net new office space delivered during the past 12 months. Apple has been a driver of demand for space in some of the submarket's newest assets. Apple leased all the space in 8777 Washington Blvd., a 128,000-SF project that was delivered in early 2021.

Apple also occupies 82,500 SF at Brick and Machine, a project that was completed in 2021. Apple intends to expand further in the submarket. In late 2020, the company acquired a 4.5-acre site adjacent to 8777 Washington with the intention of building 550,000 SF of additional space across two buildings. The Los Angeles City Council approved zoning changes necessary for the development in May 2023, and excavation is underway on the site.

Culver City Submarket Indicators (4th quarter):

• Vacancy Rate: 25.8%

• Average Asking Rent: $4.35 SF/month (FSG)

• Net Absorption: -106,475 SF

• Construction Activity: 332,413 SF Under Construction

(source: Costar)

INTERESTING AVAILABLE CULVER CITY CREATIVE OFFICE

After reading our market breakdown, you can probably guess that Culver City is teeming with creative office opportunities. Below are two of my favorites. Let me know if you’d like a tour.  

5920 BLACKWELDER ST

Located in the heart of Culver City Arts District and adjacent to the Blackwelder Creative Campus, this creative office is a 5-minute walk to a multitude of amenities, including the Cumulus Whole Foods and retail center.

With approximately 7,016 square feet of available space, this Redcar Properties designed office features best-in-class creative conversion elements and is worth touring if you’re looking in the Culver City market. The asking monthly rent is $4.95 per SF, NNN.

9300 JEFFERSON BLVD

This 7,543-square-foot sublease features all of the creative office touches you could ever want, including a roof terrace, high-end improvements, and an open space mezzanine. The furniture is potentially available, too, making this an ideal option for a company looking to plug & play. With negotiable rent, this sublease term is through January 31, 2029.

LA PRODUCTION ACTIVITY HEATING UP

Los Angeles' struggling soundstage sector is slated to make a comeback in mid-2025 thanks in part to tax sweeteners offered by the state of California, according to one of the industry’s most plugged-in players in the entertainment capital of the world.

Victor Coleman, the chairman and chief executive of Los Angeles-based entertainment real estate landlord Hudson Pacific Properties, said the recent proposal to more than double funds in California’s Film & Television Tax Credit Program is already translating to renewed optimism for the sector that's still in recovery mode from the COVID-19 pandemic and last year's Hollywood writers and actors strikes.

"While Los Angeles show counts have yet to normalize post-strike, we presently have contracts for or interest in nearly 80% of our film and television stages," Coleman said during an earnings call. That renewed demand is "coalescing around 2025 production starts, and recently bolstered by the governor's proposal to increase California's film and television tax credit program" from $350 million to $750 million annually. (source: Costar)

RUMBLINGS

👉 Ryan Murphy’s former office at 729 -733 Seward Ave is available. For pics, check out this Wallpaper* feature, Inside Ryan Murphy’s Halston-inspired Hollywood HQ. The office is about 15,000 SF, and the monthly rent at 729 Seward is $5.50/per RSF, NNN (nets are $1.50). Let me know if you’d like a tour.

🏗 The $1-billion Television City makeover has cleared a key hurdle. After a marathon hearing, the Los Angeles City Planning Commission has endorsed a $1 billion proposal from Hackman Capital Partners that would revamp and expand the Television City complex in Fairfax.

The project, when first unveiled in 2021, had called for 1.1 million square feet of new construction to complement the original William Pereira-designed structures at 7600 Beverly Boulevard, where programs such as All in the Family and American Idol have been filmed. A revised plan designed by Foster + Partners, revealed earlier this year, cuts that expansion by dropping one of the 15-story office towers originally planned for the 25-acre property. Those changes were followed today by additional revisions, made at the request of City Councilmember Katy Yaroslavsky, including the removal of 38,000 square feet of general office space, the reallocation of 12,000 square feet of general office space to production offices, and a height reduction to buildings along Fairfax Avenue. The result will be a maximum of 500,000 square feet of general office space and 712,000 square feet of production offices. (source: Urbanize Los Angeles)

Thanks for reading. If you want me to look into something or have some ideas for the newsletter, let me know, and I’ll get right back to you.

Ted Simpson
Founder and CEO
Commercial Real Estate Advisors
(c) +1 310.384.6512 |(e) [email protected]
CA DRE License #0109718

P.S. Whenever you’re ready, here are 3 ways I can help you with your real estate.

1. A new home for your business. So, you want to move, but you don’t know the market. I can help.

2. Time to renew your lease? Don’t quite trust your landlord? Consider me your personal polygraph. BTW, I recommend starting the lease renewal process six months out at a minimum.

3. Sublease your space. You’ve outgrown your space and need to move but don’t want to pay two rents? I got you.