What Tenants Want: A Peek Into 3 Los Angeles Office Leasing Decisions

Although the Los Angeles office market, along with other markets around the country, is not as active as it was six years ago, companies are still moving in and out of their offices, setting up deals.

Tenants have the upper hand in lease negotiations. Landlord concessions remain at historically high levels, and the flight to quality is a phenomenon observable in nearly every submarket, according to a second-quarter office report from Savills. The overall availability rate in the Los Angeles market was 28.1% in Q2, according to Savills. 

Bisnow spoke to three tenants who signed new leases this year about their hunt for new space. All three had very different needs and wants, but there were a few overlapping considerations, like cost and location. The tenants considered these factors, as well as others desirable for their businesses, in their decision-making processes. But for some of them, the motivation was also to simply find a place that entices workers to come in. 

“People just get really excited about new things and the new space, and they want to be a part of it,” Savills Los Angeles Region President Josh Gorin said. 

Room To Grow

Business and technology consulting firm West Monroe had outgrown its Downtown office in terms of size and capability, and the end of its lease was approaching. On the hunt for something that was both larger and more attuned to the way its employees work and collaborate, it found a space at 700 South Figueroa St., overlooking the Bloc shopping center. 

The new office, at roughly 25K SF, is nearly three times as large as their previous spot in the Wedbush building. And it was a great value, Los Angeles Office Lead Jordan Sternlieb said: On a per SF basis, the rent is less than what they were paying for their old space. 

“Compared to other places [in Downtown], the per square foot value was really appealing, not to mention all the other things we love about Downtown,” Sternlieb said. 

The office space sits over a portal directly into the 7th Street/Metro Center rail station and offers a more convenient and economical parking option than their previous location. 

The new office has a raw, industrial feel, with lots of open space, no drop ceilings and, from the 30th floor, a 360-degree view of the city, which Sternlieb said he “kind of underestimated” initially but now loves. 

The space was basically turnkey, but West Monroe did pay to upgrade the internet, which they rely on to make sure that they can seamlessly connect to colleagues in the field and in West Monroe’s other offices around the country. 

“Everything was kind of there for us in terms of the ways we wanted to work, but we did put our own touches on the technology to really be able to set us up for success and kind of the way we typically work, 

Sternlieb said that it isn’t uncommon for his consultants to be on the road often, meeting clients or heading to sites. The global firm works across multiple industries, including life sciences, energy and utilities, healthcare, and financial services, consulting on mergers, acquisitions, operations and technology.

For West Monroe, the office is not only a place to work but a place to gather, debrief and host events for employees or clients. The office they have now not only allows them the space to do that, but also is the kind of space they feel encouraged to show off. 

“This space that we picked really stood out compared to the other options we had, in terms of not being a traditional, regular sort of office space,” Sternlieb said. “It just was so much more modern, and a much better fit for our team and our culture in terms of what we can do with the space and how we work.” 

Mission-Aligned

Amanecer Community Counseling Services has been a long-time tenant at 1200 Wilshire Blvd. in Westlake, so when they needed more space to accommodate newly hired therapists, case managers and administrative staff, they didn’t look far. 

The mental health nonprofit signed a lease renewal and expansion for just over 29K SF across two floors at the building in City West, where they already had offices and clinics serving their clientele, which includes adults and children. 

The organization has a certain amount of loyalty to the space, not only because they are established at the site, but also because of the relationship they have with the landlord — a relationship that was tested a little over a year ago when the organization was suffering from cash-flow issues. They merged with another organization and those problems are now in the rear-view mirror, but the goodwill from the way the landlord navigated the issues remains. 

“When we were going through some hard times, they really worked with us on our payments, and they've always supported and donated to our cause,” Amanecer Vice President Teddie Valenzuela said. 

The affordability of the space was a huge factor for the organization. Amanecer is in the Westlake neighborhood because the need for their services is great there, but it’s not necessarily a fashionable office district. The prices are lower than they might be elsewhere in the city, like just east across the freeway in Downtown. 

The property is also well-located for its clientele, in a neighborhood well-connected to transit by bus and on a corner, which offers good visibility. 

Amanecer has also always been able to negotiate for perks such as additional security features. Valenzuela was pleased that, in conjunction with their recent lease extension and expansion, ownership agreed to renovate the bathrooms on Amanecer’s floors, which she said had started to show a little wear. 

“They’ve always really been accommodating and really cared about what was going on with our clientele,” Valenzuela said. 

Logical Consolidation

Real estate services provider Savills this year announced plans to unify its Los Angeles offices in the stand-out Century City submarket. Savills’s new, approximately 24K SF space is roughly the same size as the two offices the firm will shed combined. 

“We've always operated with two offices for reasons that seem to be more emblematic of how our competitors have always done it, where there's always been a Downtown office and a separate Westside office,” said Savills’ Gorin, who oversaw lease negotiations for the new office. 

“I don't think anyone cares anymore where your office is, from a client perspective,” Gorin said. 

“It's not sort of market-driven in the same way maybe it was 30 years ago. It's really more for us about creating an environment that people get excited about.” 

People were not so excited about the Downtown office. The firm’s Westside office was in Westwood, and for the last few years was often at or over capacity as Downtowners opted to head to the Westside office rather than trek into the city’s central business district. Many of Savills’ brokers live on the Westside and for years would drive past the Westwood office on the way into the Downtown one, Gorin said. 

“It just didn’t make a lot of sense,” Gorin said. 

After an “exhaustive” workplace study that included focus groups and surveys, they chose a space in 1900 Avenue of the Stars, one of Anderson Real Estate’s Anderson Towers, and will move in August. The property just completed a $100M renovation and has been popular with tenants looking for space in a market that has been a steady bright spot in an otherwise struggling Los Angeles office market. 

That investment in the property was attractive to Savills, but easy, convenient parking and a direct connection from the building into Westfield Century City and its restaurants, shops and other amenities were bonuses. 

“It really makes it convenient, exciting — a reason to come to work,” Gorin said.