The Top Los Angeles Office Leases of 2022
December is usually a busy time for brokers looking to wrap deals up before the new year. This year, however, the end-of-year rush hasn't quite materialized, the result of economic challenges and changing tenant demands.
"This year is different," Savills Senior Director, Head of Office Research Michael Soto said. Though he hasn't seen too many deals fall apart, "things are slowing significantly" in terms of leasing, Soto said.
Of the top leases of the year, the majority occurred in the beginning of 2022, when there was a bit more optimism about leasing and the office market. The top lease of the year — CAA's pre-lease of space in an under-construction Century City tower developed by JMB Realty Corp. — was announced in January 2022.
Sublease space inventory is still sky-high in the Los Angeles market, and it's not just leases that are coming due soon, Soto said; it's leases that are set to expire in 2030, 2031 and 2032.
"That's something that we're really focused on," Soto said. "A lot of these companies just don't need the space anymore."
Location: 1950 Avenue of the Stars, Century City
SF: Undisclosed, but rumored to be around 300K SF
Creative Artists Agency, one of LA's largest talent agencies, signed a lease in January that would relocate its headquarters from a nearby building to a still under-construction, 37-story tower developed by JMB Realty Corp. CAA and the developer declined to disclose how much space they would take, but Soto said it's expected to be around 300K SF, which is roughly the size of CAA's existing HQ. CAA will move in in 2026.
Location: 2450 Colorado Ave., Santa Monica
SF: 208K SF
Status: New Lease
In May, Amazon announced it had signed a 200K SF lease at the Water Garden in Santa Monica. The Water Garden is owned by J.P. Morgan Asset Management, which put the property on the market in November and is hoping to fetch a staggering $1.4B for it. Amazon's first employees are expected to move in mid-2023. The company's lease was part of a plan to add more than 2,500 corporate and tech jobs here, in San Diego and in Irvine.
Tenant: Lionsgate Entertainment
Location: 2600-2800 Colorado Ave., Santa Monica
SF: 193K SF
Lionsgate renewed its headquarters lease in Santa Monica, but for just two years, Commercial Observer reported at the time. Santa Monica had a good spring, with Hulu and Roku adding to their office space in the city limits. This spot is also within a mile of Amazon's future digs.
Tenant: Western Asset Management
Location: 385 East Colorado Blvd., Pasadena
SF: 185K SF
A rare Q4 renewal, the private wealth manager reaffirmed its commitment to its offices in Pasadena. Though there are definitely some media and tech companies at the top of the list, traditional tenants like financial services companies were the ones that dominated the top leases this year.
Tenant: First Republic Bank
Location: 1888 Century Park E, Century City
SF: 156K SF
First Republic's renewal was also a rare expansion. The bank was not alone in its interest in Century City: It is the city's most expensive office submarket. At the time of this renewal, the submarket had an average rental rate of $5.81 per SF per month, far above the greater LA average of $3.87 per SF, and one of the lowest vacancy rates in greater L.A.
Tenant: Forever 21
Location: 110 East Ninth St., Fashion District
SF: 148K SF
Status: New Lease
Fashion retailer Forever 21 moved its headquarters into the freshly renovated California Market Center in Downtown's Fashion District. News of the lease came in early January, around the same time as apparel company Adidas took about 107K SF at the same complex. Brookfield's owned a controlling interest in the CMC since 2017.
Tenant: TCW Group
Location: 515 South Flower St., Downtown
SF: 129K SF
Status: New Lease
News that TCW would leave its headquarters at its namesake TCW Tower and move to City National Plaza came in February. The new space is less square footage than the roughly 180K SF offices it had at TCW Tower, Commercial Observer reported.
Other top office leases of the year were Quest Diagnostics' nearly 200K SF renewal in West Hills, Raytheon's renewal of almost 145K SF on East Imperial Highway in El Segundo, and Wells Fargo's downsize and renewal of about 126K SF at 333 South Grand Ave. in Downtown.
Looking ahead, Soto anticipates that financial services companies, banks, nontech and media tenants will be the ones driving the market and locking in the biggest leases as the market "rebalances" and stops relying on tech and media companies' big requirements.
"In many ways, it makes for a less distorted office demand ecosystem, and probably over the long term, it makes for a healthier office demand ecosystem," Soto said.