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CBRE Releases New Report on Growth of Creative Office in Los Angeles

Report says the trend toward creative space will continue to gain velocity as the total volume of tenant lease expirations in LA County increases over the next three years

LOS ANGELES, Calif. (July 18, 2013) – CBRE released today a new report on the growth of creative office space in Los Angeles County that finds that the growth of creative office has expanded beyond traditional media, tech and entertainment companies in West Los Angeles to include more traditional industries such as law firms, real estate firms and financial companies in more traditional office submarkets like Century City and Downtown LA.  In addition, the CBRE Research report says the trend toward a more efficient use of space is expected to continue to gain velocity during the near-term in Los Angeles as the total volume of tenant lease expirations will increase by approximately 10 percent each year for the next three years.

One factor driving the increase in creative office strategy is the underutilization and inefficiency of traditional office configurations. Recent 2013 figures from CBRE’s Workplace Strategy group provide a deeper understanding of current space use. On average, office space is only occupied roughly 48 percent of the time, fueled by the increasing mobility of today’s modern workforce.  As a result, many of the more traditional firms that are focused on developing a creative workplace strategy are eliminating the traditional cubicle environment and executive offices in favor of highly-functional, shared workplaces, with the cumulative effect being cultural changes that enhance collaboration, creativity and productivity.

“We are seeing office tenants across all industries focusing on space optimization, increased collaboration, enhanced culture, employee wellness, and the ability to attract, engage and retain top talent,” said Gary Baragona, Director of Research and Analysis for CBRE and the author of the report. “More and more, we are seeing work environments with open seating, collaborative workspaces, focus rooms, learning corners and socialization areas.”

Citing CBRE’s most recent “Tenants in the Market” report for West Los Angeles and Downtown Los Angeles, Mr. Baragona says that “more than 35% of the 114 companies currently in the market with requirements of more than 10,000 sq. ft. have expressed the desire to either locate in a pure creative office building or within an alternative creative space configuration in a traditional office building.”

With this shift in demand, the vacancy rate within buildings with existing creative build-out in core creative office markets remains tight, while the vacancy rate in traditional office buildings continues to stay elevated.

In Santa Monica, widely considered ground zero for LA’s creative office boom, elevated lease rates and a dwindling supply of vacant space are causing many users to consider adjacent submarkets like Playa Vista, Culver City and Hollywood for their creative space needs.

In addition, many office tenants have started to convert space within a traditional high-rise office building into an alternative creative office space configuration within a similar high-rise building. In 2011, approximately 10 percent of the new direct Class A transactions in Downtown Los Angeles were these types of space conversions. This figure increased to 24% in 2012 and is expected to see further increases in 2013 as more tenants make the move to creative space, according to the CBRE report.  

Among the tenants in Downtown LA converting traditional high-rise space to creative office is CBRE, which will move its Global Corporate Headquarters and 200 regional employees, representing all CBRE’s service lines, into the top two floors at 400 South Hope St. in September. The new office will be one of the company’s first “Workplace360” offices in the United States.  “Workplace360” is CBRE’s Alternate Workplace Strategy initiative, which maximizes employee collaboration and productivity through technology, space utilization, sustainability, mobility and enhanced flexibility.

“In the process of designing our new space, we extensively researched different strategies that would allow us to work more collaboratively and efficiently in serving our clients,” said Lewis C. Horne, executive managing director for the Greater Los Angeles and Orange County Regions for CBRE.  “The result will be one of the most forward-thinking offices in the country, and will reflect the strategic advice that we are providing to our occupier clients who are increasingly exploring new ways to work better, smarter and more productively in an increasingly mobile, highly connected world.”

“This is not simply about driving efficiencies – it’s about building a more collaborative, mobile and healthy environment,” he added.  “In short, it’s about building a better company.”

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue).  The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at

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