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Culver City Brings All The Tech To The Yard

Apple, Amazon Validate City's Huge Construction Boom
January 17, 2018
Move over, Hollywood. Culver City is L.A.’s new hot spot for tech and entertainment real estate.

Only months after landing the highly-coveted, quarter-of-a-million-square-foot lease for Amazon Studios, Culver City has also snagged Apple, Inc.’s music and content divisions.

The Cupertino-based iPhone maker has signed for more than 200,000 square feet of office space at two locations in Culver City, according to sources familiar with the deals.

Apple’s music division is planning to move into the entirety of Hackman Capital Partners’ 5500 W. Jefferson Blvd. project, an 85,000-square-foot office building under construction. The tech company already occupies 40,000 square feet for its Beats by Dre business at another Hackman property in Culver City’s Hayden Tract area.

Apple’s video content division will be leasing the proposed four-story, 200,000-square-foot, glass-clad office development at 8777 Washington Blvd., the former Surfas Culinary District location, currently under construction by Lincoln Property Co. and Clarion Partners. The office space was previously slated for HBO, but after complications in the planned AT&T, Inc. and Time Warner, Inc. merger, the Time Warner-owned entertainment company pulled out of the deal.

Apple had reportedly been scouting out Hackman’s Culver Studios before Amazon scooped up the 280,000-square-foot project in the fall for its content division and other units.

Terms and details of the Apple leases have not been disclosed. Apple and Lincoln Property did not return calls, and Hackman declined to comment.

"We look at that and think this is terrific news because they’ll have spin-off demand from others who want to be there - and I should add that’s an incredible positive for our hotel," said Tom Wulf, senior vice president at Lowe Enterprises, which is underway on developing a huge mixed-use project with office, retail, apartment and hotel space known as Ivy Station across the street from Apple’s Washington Boulevard office.

Indeed, the news is certain to validate all Culver City officials and developers who have been betting big on the city recapturing its reputation as a leading production enclave as it was in its heyday with the MGM Studios, which produced classics such as "Gone with the Wind" and "Citizen Kane." With the convergence of tech and entertainment creating a sort of Hollywood 2.0 with new content providers, who need office and production space, city officials have been eager to approve developments that help attract the industry.

The aging 5 million-square-foot office market is now undergoing a renaissance of development with more than 1.5 million square feet in the pipeline.

"That’s a huge desire," said Culver City Mayor Jeff Cooper in an interview. "Not just because of our history, but because that’s what’s happening now. It provides jobs and keeps us relevant, and that’s one of our biggest responsibilities."

City officials have been a driving force in revitalizing Culver City. For years, they have been updating its master plan, streamlining its development policies and collaborating with developers - even taking over the shuttered Community Redevelopment Agency - to ensure its vision. Officials view the new projects as a way to bring the city up-to-date with modern company needs and are focusing on creating a more defined and walkable downtown as well as reenergized hubs for live, work and play near the new Expo Line transit stops.

As a result, the once quiet and aging Culver City is now booming with a variety of projects as varied as a half-million-square-foot, mixed-use development at an Expo Line stop to a 1.6-acre hip public market featuring artisanal vendors on the west that could substantially reshape the city.

"For a lot of people betting on Culver City, they are seeing what happened in Hollywood and are saying, ‘I think the same thing can happen here,'" said Michael Soto, research manager at Transwestern in downtown Los Angeles. "The difference is Culver City is still on the Westside and we have tracked this market long enough to know that there are certain companies that won’t look outside the Westside."

The city has never totally lost its film and media appeal. Sony Pictures Entertainment owns a large studio lot there. HBO, National Public Radio and National Football Association have been in Culver City for years.

Other areas in Los Angeles County however have been attracting more media and production companies in recent years. Hollywood has pulled in major firms such as Netflix and Viacom as developers there have created more than 1 million square feet of new production studio space, most of which has been leased before even being completed. Neighboring cities such as Santa Monica, Venice and Playa Vista - nicknamed Silicon Beach for their popularity with tech companies - have been first choices for major firms such as Yahoo, Facebook and Google.

Lately those markets have been leased up or hit peak pricing, leaving these companies wanting. Culver City is positioned to capture that demand. Even with new product, Culver City’s rental rates are still a discount to Santa Monica and Playa Vista.

For instance, asking rates at Apple’s new 5500 W. Jefferson building are about $3.75 a month, while asking rates in downtown Santa Monica are nearly double that, according to CoStar data. Couple that with Culver City’s embrace of the Expo Line, an elevated train that whisks riders from Santa Monica to Downtown L.A. in less than an hour, and it’s easy to see how the small inland Westside submarket could yield such attraction.

With the new developments, Culver City is creating additional space to capture even more of the growing tech and entertainment industry that is driving L.A.’s office market. There are still more projects slated to hit the market that could attract and accommodate even more businesses.

A centerpiece of the city’s development boom is the Culver Steps - the four-story, 75,000-square-foot retail and office complex that features 35,000 square feet of public space highlighted by a huge outdoor staircase. The city has been working on the project, which sits on a former parking lot between the Culver Hotel and Trader Joe’s complex in downtown Culver City, for more than six years. Hackman Capital bought the development rights last year. The firm liked the project’s location, adjacent to its Culver Studios project, which is also scheduled to undergo a 413,000-square-foot expansion this year, where Amazon signed its lease.

"It’s the front door step to the Culver Studios and it lent itself to expand our footprint into downtown," said Ryan Smith, managing director at Hackman. "It’s been little bit buried and now that parking lot is becoming the Culver Steps and it’s a way to marry the assets and offer the tenants of those assets indoor and outdoor space. So we look forward to programing the plaza as part of our overall plan in the area."

The Culver Steps broke ground this fall and is expected to open next year.

Not too far away, Lowe Enterprises and AECOM Capital are underway on Ivy Station, a mixed-use complex at the Culver City Expo Line Station. It includes 200 apartments, a 148-room hotel, 210,000-square-foot office and 36,000 square feet for shops and restaurants. Designed by Cuningham Group, Relm Studio, EYRC Architects and KFA, the $300 million project has been designed with the train station in mind and offers a transit plaza and pedestrian walk-through spaces.

Wulf said Lowe has been working on the project for more than six years and has plans to offer entertainment in the public spaces and rooftop. It’s the type of development that capitalizes on the growing live, work, play mantra of the city and its Expo Line hubs.

"It’s not only providing office, but it’s creating a place where office tenants can have office and the employees can live and eat and see entertainment and use the light rail," he said. "With the addition of the hotel, we can provide something lacking in the market."

Other developments are underway too, such as One Culver, a renovation of Sony's former 260,000-square-foot office building in downtown where WeWork and Equinox has leased out about half the space. Others in the entitlement phase include the Culver City Market Hall, where the city is working with developer to bring a 27,000-square-foot food hall with artisanal vendors to the west side of the city.

Jacquelyn Ryan, Los Angeles Market Reporter  CoStar Group   
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