_Colin Fitzgerald: the tech market in Los Angeles and Las Vegas
My 2018 ended with a trip to the West Coast of the States. I went to meet with my San Francisco-based Partner Mark Sullivan, as well as colleagues and clients at Newmark Knight Frank, and to see first-hand how the commercial office market is faring, which ended up being a powerful reminder of how the tech sector is shaping the office industry.
My first stop was visiting our four offices in Los Angeles – the perfect excuse to hire a Mustang convertible! We all know LA for its Hollywood red carpet, but behind this glitzy film industry is a booming multimedia and streaming industry that is pulling in some of the biggest brands in digital content.
Ranked sixth by the Knight Frank Tech City Index, the city is home to some of the biggest players in the market, including Apple, Google, Spotify, Uber and Amazon. In October 2018, Netflix drastically expanded its LA footprint with the lease of EPIC, a 13-storey office development on Sunset Boulevard. You always go to LA with high expectations, yet it’s impossible not to be impressed by the scale, diversity and dynamics of the market there.
At present, asking rents are at an all-time high, pushed by new construction – despite an oversupply of traditional space, demand outweighs supply of creative spaces. Co-working occupancy growth now surpasses 4m sqft – a colossal 50% increase on two years ago. And it shows no sign of slowing down; Japanese tech group SoftBank Corp is set to inject $2bn into the region’s dominant operator, WeWork.
My next stop was Las Vegas, where we visited our offices and clients to discuss how the gambling capital of the world was faring and the potential impact of changes in gambling regulations, set to enable online gambling in specified states; opening the door for tech-based companies.
The leading Western platform for live game streaming consumption, Twitch, was purchased by Amazon in 2014 for approximately $1bn and has gone from strength to strength in the four years since.
As of October 2018, the leisure/hospitality industry provided 25% of Las Vegas’s employment, highlighting the sector’s dominance in the city. As the world of gaming becomes increasingly digital, it’s having a big impact on occupier spaces in Sin City.
The States is just one example of the digital transformation in the modern workplace in a trend that’s set only to grow stronger in 2019. Our Digi Bytes events will be exploring this shift in more detail and I’ll be monitoring it closely myself, too. Watch this space!
Colin has 32 years of real estate and business management experience. He heads up Knight Frank's International Occupier Services team, focusing primarily on the needs of European and American clients, in particular portfolio strategy and optimisation.