February 25, 2022 9:00 AM
Newmark [1] announces it has completed the sale of the Hollywood Media Campus, a 3.5-acre site comprised of a fully leased, 75,593-square-foot office building and an adjacent development parcel to The Georgetown Company, a leading developer and owner of commercial, retail and mixed-use properties nationwide. The campus, located at 1350 North Western Avenue in Hollywood, California, traded for $93 million.
The seller of the campus was Gemdale USA Corporation, a Pasadena, California-based real estate investment and development firm. Newmark Co-Head of U.S. Capital Markets Kevin Shannon, Executive Managing Directors Ken White and Rob Hannan and Senior Managing Director Laura Stumm represented the seller in the transaction.
“The Hollywood Media campus offered the ideal combination of stable income from existing tenancy coupled with the growth potential from the development of the adjacent parcel,” said Shannon. “The new ownership will have a variety of options for the site ranging from by-right development to pursuing a zoning change to increase density.”
“A majority of the Class A office inventory in Hollywood is controlled by a small concentration of owners with long-term holds, making opportunities to acquire institutional assets extremely rare in this market,” added Stumm.
“We’re excited about the growth potential in Hollywood and in Southern California broadly,” said Michael Fischer, Senior Vice President of The Georgetown Company. “The neighborhood is in the midst of an impressive renaissance with innovative technology firms joining the entertainment and media companies the area is known for, creating a unique and vibrant community. We plan to explore a number of exciting development options on the site and we are also actively considering other opportunities in the market.”
The existing office building at the campus measures 75,593 square feet and is 100% leased to Netflix via a sublease from master lessee Zest Finance. Over the past 12 months, Netflix has made a significant investment in the existing building to deliver an extensively renovated trophy office and studio destination that has become a mission-critical piece of the flourishing company’s Hollywood footprint.
The development opportunity is a 1.7-acre site with the right to build in accordance with current zoning and the opportunity to increase density with a zoning change. The site’s location in an Opportunity Zone presents the ability to reduce capital gains taxes by as much as 100% over ten years.
The Hollywood Media Campus is situated in the global capital of the media and entertainment industry. The transit-oriented destination is located only three blocks from Netflix’s 1.3-million-square-foot Hollywood headquarters and two blocks from the Hollywood/Western MTA Station. The property also offers strong freeway accessibility with the 101 Freeway just two blocks away.
While other sectors of the economy struggled during the pandemic, entertainment companies have led the way in Los Angeles’ office market recovery, particularly on the Westside, according to Newmark Research. Driven by increased consumer demand for content, technology, streaming and video game companies led leasing activity in 2021, a trend that is expected to continue in 2022.
[1] Dba Newmark Knight Frank in California
About Newmark
Newmark Group, Inc. (Nasdaq: NMRK), together with its subsidiaries (“Newmark”), is a world leader in commercial real estate, seamlessly powering every phase of the property life cycle. Newmark’s comprehensive suite of services and products is uniquely tailored to each client, from owners to occupiers, investors to founders, and startups to blue-chip companies. Combining the platform’s global reach with market intelligence in both established and emerging property markets, Newmark provides superior service to clients across the industry spectrum. Newmark generated revenues in excess of $2.9 billion for the year ending December 31, 2021. Newmark’s company-owned offices, together with its business partners, operate from approximately 160 offices with over 6,200 professionals around the world. To learn more, visit nmrk.com or follow @newmark.
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