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The tech takeover

Tech and new media giants are inking deals for office space that combined could fill the US Bank Tower—twice

When Hudson Pacific Properties purchased a majority stake in the Westside Pavilion in 2017, its executives saw an opportunity to convert the stagnating mall, with its location near freeways and the Expo Line and its soaring ceilings, into a “unique and exceptional” office space.

Before embarking on a renovation that’s expected to cost $410 million, Hudson Pacific, which is headquartered in Los Angeles but has offices in seattle, Silicon Valley, and San Francisco, contacted its clients. Would any of them want to move into the once-iconic mall?

“Our expectation is not to lease it that early in the process,” says Alex Vouvalides, Hudson Pacific’s chief investment officer. “You hope to, but being realistic, you assume that it’s going to happen at a later date.”

Its clients happened to include Google. And, in January, the tech giant put its name on the lease for all 585,000 square feet of the pavilion’s future office space. Google’s move-in date? Three years from now in 2022.

It was another big deal for Hudson and the latest in a flurry of leases signed by some of the biggest tech and new media companies in the world looking to put down substantial roots in LA.

Over the last two years, Facebook, Apple, Amazon, Netflix, and Google—also known as FAANG—have collectively laid claim to at least 3.35 million square feet in Los Angeles, according to Costar. That’s more than double the square footage of the 71-story US Bank Tower.

That square footage is impressive, but less astonishing when compared to traditional production studios with stages and back lots (the 40-acre CBS Studio Center in Studio City, for example). What is surprising, industry professionals say, is that the tech giants are leasing offices well before they can move in.

For companies looking to make their own mini campuses, the Los Angeles market is “very competitive right now,” says Jeff Vertun, a leasing specialist with CBRE. “Large blocks of space are not in high availability.”

Getting space in a prime area can hinge on making contact with a property owner or developer early on—sometimes several years before a complex is even built, Vertun says.

Netflix offices on Sunset Boulevard. The streaming company has also leased a 13-story high-rise under construction across the street, as well as 355,000 square in Academy on Vine, expected to open in 2020.
GC Images

As entertainment continues to shift toward streaming media, companies like Netflix and Amazon are looking to produce more content in the historical cradle of movies and TV.

It’s not just that Los Angeles is the capital of entertainment. The central location of Hollywood, in particular, and its proximity to transit, has only boosted its popularity, says Vouvalides.

The same could be said of Culver City, where Amazon has leased 530,000 square feet at the Hackman Capital-owned Culver Studios, scheduled for completion in 2021. Amazon has claimed an additional 75,000 square feet at Hackman Capital’s nearby Culver Steps development, which is expected to open later this year.

Apple has also staked a claim in Culver City, where the company has leased an entire 128,000 square foot building under construction now near the city’s Expo Line station. It already leases 85,500 square feet in Culver City, in a building near the Expo Line’s La Cienega station.

Google added 100,000 square feet to the Spruce Goose Hangar in Playa Vista before moving in at the end of last year. In the background, a huge vacant lot that Google also owns.
Connie Zhou, courtesy of Google

Before it signed onto the Westside Pavilion in Rancho Park, on LA’s Westside, Google had just moved employees into Playa Vista’s Spruce Goose hangar. The hangar is about four times the size of Frank Gehry’s Binoculars building in Venice, where it has held offices since 2011.

Just a few blocks from the Spruce Goose, Facebook is reportedly leasing 260,000 square feet in The Brickyard, a stylish new complex in Playa Vista.

In Hollywood, Netflix announced in November that it would take up all 355,000 square feet of available office space in the Academy on Vine development off Vine Street, slated to open in 2020.

“Our expansion into the Academy on Vine property further deepens our connection with the Los Angeles and Hollywood communities,” Netflix CFO David Wells said in a statement at the time.

The month before, the streaming company signed a lease for a 13-story tower under construction on Sunset Boulevard, near the 101 freeway. It already takes up a 14-story high-rise across the street. Both buildings were developed by Hudson Pacific.

“We have a good sense of what we need to do to make sure we can attract [these] types of tenants,” Vouvalides said.

That includes layouts that offer easy transitions between indoors and outdoors, maximizing natural light inside, and building lots of outdoor space for workers.

The consolidated, mini-campus-making approach that the FAANG companies are taking throughout LA is a contrast to the piece-meal tack taken by Snap, the parent company of Snapchat, which caused a stir in Venice around 2015, when it began to scoop up storefronts and traditional office space across the neighborhood.

That model disrupted the legendarily eclectic beach community. Locals argued the company’s presence pushed out local businesses and organizations, including a youth shelter; raised rents; and fueled a real estate frenzy that led to little rundown bungalows selling for upwards of $1 million.

Residents staged protests in front of the company’s properties, and ultimately, Snap largely relocated to more centralized offices in Santa Monica.

In all, Snap’s square footage in Venice was under 200,000 square feet—just a small fraction of the space that companies like Netflix and Amazon are each set to occupy in LA. In Hollywood alone, Netflix has gobbled up 1.1 million square feet of office space.

But with it and the other tech giants not set to expand for a couple more years, it’s too soon to say how the market and neighbors will react.

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