Hollywood’s comeback is underway with ‘serious’ challenges ahead – Commercial Observer
Street performers are back on Hollywood Boulevard, but now they’re not the only ones wearing masks.
The first films and tourists have also returned to Hollywood this summer, bringing with them the feeling of a pre-pandemic “normal”. But – even before the Delta variant takes control – serious challenges lie ahead beyond the boulevard, including a big vacation for both office and retail, as well as a frustrating lack of affordable housing.
Hollywood partnership (THP) nonprofit reported that there is now more than $ 2.1 billion in new investment under construction or authorized, all in the core of the Hollywood Entertainment District, including the $ 100 million redesign of the Hollywood & Highland mall – raising hopes of a new golden age for Hollywood.
“Although we are not quite out of the woods, we can see the clearing through the trees,” said Kristopher larson, President and CEO of THP. “For the second quarter in a row, pedestrian traffic is rebounding rapidly in Hollywood, drawing visitors not only from the area, but from across the country.”
Eric Willett, Southwest Pacific Research Director at CBRE, said Hollywood has been one of the best positioned markets over the past year and a half. He said the content production-focused submarkets across LA have done relatively well, and “Hollywood is ground zero for that.”
With streaming companies like Netflix, Disney, and HBO Pushing to develop and generate as much content as possible, the demand for content space has strengthened Hollywood’s base. For example, as one of LA’s primary owners for content creation and office space, Hudson Pacific Properties (HPP) leads the way with its Studios at sunset wallet. The company is currently advancing plans to expand one of its best studio and office campuses in Hollywood to over 1.1 million square feet.
Willett added that Hollywood has seen a growing interest in more mixed-use complexes that combine studio, office, retail and multi-family housing. For a, Harridge Development Groupit is enormous Crossroads of the world is the largest project underway, with 1.3 million square feet of space that includes new office and retail space, as well as 950 residential units.
In addition, the number of pedestrians improved significantly in the second quarter after authorities lifted trade restrictions. After the silent closings, pedestrian counters measured a 164% increase in activity at the intersection of Hollywood and Highland during the months of April through June, according to the THP report.
Hotel occupancy rates have also increased rapidly to over 60% in the last quarter, and more investments in the hospitality industry are underway, including the 134 rooms. Whiskey Hotel north of Hollywood Boulevard. In addition, a new Hyatt hotel on Cahuenga Boulevard recently secured a $ 27 million bridge loan to continue construction, and five hotels are under construction in Hollywood’s main entertainment district, and 12 more are eligible or are applying for rights in the greater Hollywood area. ‘Hollywood.
The past year has presented new challenges for office space in Hollywood, just like in the rest of the city and in urban areas across the country. Rents charged for Class A office space hit $ 4.73 per square foot per month in Hollywood, a slight quarter-over-quarter decline, according to THP. But, Willett pointed out that Hollywood takes advantage where other markets do not to attract big players.
âThese tenants are making a long-term bet in the submarket as a head office,â said Willett.
Indeed, in April, the global post-production firm Company 3 signed an 11-year lease expand its 70,285 square foot footprint at HPP Harlow office campus.
The demand for multi-family investment is also returning to pre-pandemic rates as rents rebound with the “big comebackâthis year. Sadly, it also means a return to the affordability crisis. Willett said the lack of affordable housing remains one of the biggest obstacles to a Hollywood resurgence, with limited available land and limited availability. arduous delays and rights allocation processes for developers.
âWe were hoping to see more affordable housing come out of the pandemic,â he said. “Unfortunately, it is still very unaffordable.”
Retail vacancy is the most visible black spot in Hollywood, and will likely be the last to develop in a rebound, as nearly 2 in 5 properties remain open. Even after reopening businesses and businesses this year, Hollywood experienced a slight 1% drop in occupancy from the previous quarter.
Gregory Cornfield can be reached at [email protected].