2018 Leasing Exceeds 1.3 Million Square Feet
- The average rent in Hollywood/Wilshire Corridor dropped to $2.59 per square foot (PSF) full service gross (FSG), a $0.07 difference from last quarter. The year-over-year difference was more precipitous, dropping by $0.17, or 6.1%
- Vacancy dropped 120 basis points from one quarter ago, recording 15.7%
- Leasing activity recorded 753,700 square feet, driven by Netflix's aggressive expansion in the Hollywood submarket
- Investment activity recorded $82.9 million over two transactions for buildings greater than 25,000 square feet
- The development project at 7007 Romaine Street in Hollywood delivered to the market, leaving approximately 894,500 square feet of office product under construction and 191,600 square feet of proposed construction
The Hollywood/Wilshire Corridor market finished 2018 with momentum. Vacancy fell 120 basis points from the previous quarter, while year-to-date absorption posted positive, recording 212,800 square feet. Some 894,000 square feet of office product is currently under construction, along with 191,600 square feet of additional proposed product scheduled to break ground in 2019. The majority of deliveries will take place in 2020 with the arrival of Hudson Pacific's EPIC and Harlow properties, as well as Kilroy's Academy project.
Rents dropped $0.17 from a year ago, but much of that movement stemmed from an abundance of vacant space in Wilshire Corridor and a dearth of space in Hollywood. Strong pre-leasing efforts in Hollywood this year, mainly by Netflix, will limit upward pressure on rents from a volume standpoint.