An international brokerage is upgrading its Los Angeles office space as tenants continue to prioritize the newest and nicest properties across the country.
Savills will close its Westwood and DTLA offices and combine them in a larger “experiential” space opening this summer on a full floor in a Century City property undergoing a $100 million renovation.
The London-based commercial property services firm will shutter its 10,000-square-foot office at Westwood Plaza at 1100 Glendon Ave and its 8,000-square-foot office on the 30th floor at 777 South Figueroa in downtown Los Angeles, bringing both operations to a larger, 20,000-square-foot hub at 1900 Avenue of the Stars in Century City.
The relocation comes as downtown Los Angeles has been losing tenants to Century City and other higher-end office nodes around the city amid concerns over perceived crime and homelessness. Downtown Los Angeles counts record-high office vacancy of 21% — up from 20% last year — with tenants giving back 660,000 more square feet than they leased in the past year, according to CoStar data.
Century City's vacancy rate is 16%, up from 15% a year ago, with tenants giving back 22,000 more square feet than they leased in the same period.
Owners of higher-end offices across the country are benefitting as vacancy rates for such spaces average 13% compared to roughly 19% for the rest of the market, according to CBRE data. They can also command about 50% higher rents than the rest of the market, up from 40% three years ago.
Savills Los Angeles President Josh Gorin — who took his skills internally to oversee lease negotiations for the deal — said the move "will place us in the premier office building in Century City."
Flight to quality
The lease expands Savills' already notable presence in Los Angeles where it has operated an office since 1971. The area is one of the few U.S. cities where it counts two offices.
The new unified hub will bring the firm's Los Angeles tenant and other client services across a wide industry range together with its capital markets, retail and industrial services, consulting services and structured finance teams.
Savills has more than 1,000 employees across 40 offices in North America.
“We’re excited to create a space that not only inspires our team but also contributes to the broader growth and innovation of the LA region," Patrick McGrath, president of the western region for Savills, said in a statement. "This office is a bold investment in our people, clients and future.”
The 28-story Avenue of the Stars building was developed in 1968 and is currently undergoing an extensive renovation by owner Anderson Real Estate that will upgrade the property's exterior with a glass curtain wall facade, landscaping and hardscaping along with some interior renovations.
The office has a tenant roster that includes Marcus & Millichap, executive search firm Korn Ferry and a bevy of law firms.
Several recent large leases are evidence of Century City's status among traditional, image-conscious tenants. Global law firm Latham & Watkins is growing its footprint at Constellation Place while JP Morgan Chase is expanding and extending its lease at Century Plaza Towers.
For the record
The building was represented in lease negotiations by Peter Best of LA Realty Partners and David Freitag, Kayla Rix and Rocky Binswanger of CBRE.