The Legendary Group is preparing to deliver 350,000 square feet of speculative creative office space to a pocket of the Los Angeles market that is experiencing a growing demand for the product. The developer will build a 17-story tower called Above from the ground up in downtown Los Angeles’ Arts District.
Above will sprout up at 411 S Hewitt St., surrounded by a growing number of projects that are ushering the Arts District through its conversion into a live-work-play destination. The neighborhood is a thriving area that was among the limited number of submarkets in metropolitan Los Angeles that posted positive net absorption in the first quarter of 2022, according to a report by Cushman & Wakefield.
“There is a tremendous amount of demand in the Arts District,” Mike Condon Jr., vice chairman with Cushman & Wakefield, told Commercial Property Executive. “We are currently tracking nearly 4 million square feet of possible requirements and are aware of more than 600,000 square feet of proposals under negotiation in the submarket. Of the seven Class A projects that have delivered, five of the seven projects have either preleased or signed deals within six months of receiving a [temporary certificate of occupancy].”
Very creative office
Designed by architecture firm Gensler, Above will encompass 311,000 square feet of Class A office space spanning 12 floors, as well as 22,000 square feet of production, retail and/or food & beverage accommodations on the ground floor. The building will also offer ample parking space on three subterranean levels and four above-grade levels, which adds to the amenity category as, despite the strides being made in metro construction activity, Los Angeles remains, very much, a car town.
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Legendary describes Above as a “one-of-a-kind” project and supports the assertion with a list of amenities that includes private outdoor patios on every floor, a street-to-street breezeway, floor-to-ceiling glass and a host of high-clear spaces for tenants in need of space with volume.
“Aside from being by far the tallest project with 360-degree unobstructed views—Above is not just a clever name, given the first full office floor starts six floors into the air—it is also catering to a more creative genre of tenant that is attracted to the submarket,” Brittany Winn, director with Cushman & Wakefield, told CPE. “With above-market parking, activated outdoor amenity areas on every level, and several high clear opportunities with up to 24-foot clear space, it literally checks every possible box a tenant will have in their requirement quiver.”
Everybody loves a comeback
Metropolitan Los Angeles’ office market has yet to return to its pre-pandemic fighting status, having posted a first quarter 2022 vacancy rate of 21.2 percent and overall negative net absorption of 117,000 square feet, according to Cushman & Wakefield research. However, McKenna Gaskill, an associate with Cushman & Wakefield, believes the metro will recover in phases and that the signs are already there with successful projects that are either well-located, new, or newly repositioned construction. “The stuff that will take a bit more time is less emotion-evoking or poorer located assets that don’t inspire employees to want to return to work,” McKenna told CPE.
In spite of the Arts District’s popularity, downtown Los Angeles is struggling with a first quarter 2022 vacancy rate of 27.9 percent and an overall negative net absorption of 233,000 square feet, according to a Cushman & Wakefield report. Yet, downtown, like Greater Los Angeles, is showing hints of recovery.
“There is a residential population of nearly 80,000 people strong that has led apartment fundamentals to nearly 95 percent leased and we are finally seeing new retailers coming in and backfilling space that was vacated by the civil unrest. We needed these components to make DTLA feel ‘safe’ again and the market is tracking well to more wholistically see tenants return at the end of summer and beginning of fall,” McKenna added.
Legendary, developer and owner of Above, plans to commence construction of the office building in mid-2023. Cushman & Wakefield’s Condon, Winn and Gaskill, along with colleagues Pete Collins and Scott Menkus, will oversee leasing responsibilities for the project. If all goes as planned, Above will welcome its first tenants in early 2026.