Q1 2024 Hollywood Market Report

2024 Market Report

First Quarter Performance

The Hollywood Entertainment District

The Hollywood Partnership (THP) is a non-profit organization that manages the public realm within the Hollywood Entertainment District (HED), which is a Property Based Business Improvement District (PBID). Simply, this means that the organization is funded by property owners within the district to provide enhanced services to promote the cleanliness, safety, beautification, and economic vitality of our neighborhood.

Executive Summary

Southern California stormed into the first quarter of 2024, experiencing an unusual weather pattern with record rainfall caused by El Niño. Despite the sudden downpours and cloudy days, the neighborhood felt somewhat renewed. The Hollywood Entertainment District (HED) was buzzing with activity as movie premieres and awards show red carpets hit the Blvd. and entertainment icons such as Kevin McCallister (also known as Macaulay Culkin) and Dr. Dre were honored with stars on the Walk of Fame. Additionally, new businesses including The Spotlight, Mars Hollywood, Status Restaurant & Lounge, Iki Nori, and Pink Teacup Villa opened their doors.

Despite the rain, the HED's recovery from the pandemic is evident. Foot traffic remained robust, with approximately 9 million domestic district users in Q1, showing an impressive 80% recovery compared to pre-pandemic levels. Employee visits also saw a significant increase, rising by 6% from the previous year and now standing at 97% of Q1 2019 levels. These figures reassure us of the HED's steady recovery.

In its 2024 Economic Forecast, the Los Angeles Economic Development Corporation (LAEDC) identified three key challenges facing LA County: regional population decline, housing affordability, and the cost of conducting business. However, amidst these challenges,

the HED has shown remarkable growth. The residential population has surged by 19.5% since 2010, outpacing citywide growth rates. This positive trend, with 23 projects (2,862 units) located within the HED, and 10% of units designated as affordable housing, paints an optimistic picture of our future prospects.

The Greater Hollywood office market experienced increased leasing activity, with 99,270 square feet of space leased in Q1 2024 despite the continued impacts of the recent Hollywood strikes and the unpredictable future of in-office work. Meanwhile, the entertainment industry is poised for growth, driving ongoing development of creative office, production, and post-production facilities in the Hollywood area.

Tourism levels are still lower than before the pandemic, with only a 78% recovery rate compared to the first quarter of 2019. In Q1 2024, hotel occupancy rates reached 70.9% in Greater Hollywood, similar to the citywide rate of 69.2%. However, both rates are still lower than Q1 2019 rates by -6.8% and -9.8%, respectively. The good news is that the United Nations World Tourism Organisation predicts global tourism will surpass pre-pandemic levels by 2% in 2024. Hollywood is poised to welcome more visitors with 13 hotel projects currently underway in Greater Hollywood, adding 1,220 hotel rooms to the region. One of these projects is the Whitley Hotel,

located at 1719 N Whitley Ave, which received approval with conditions in Q1 2024.

The retail sector faces challenges, with a steady 9% vacancy rate since 2020 and a 7% decrease in year-over-year rents. Nevertheless, the retail vacancy rate in the HED remained stable in Q1, with a positive net absorption of 3,093 square feet despite an increase in inventory from the last quarter.

Despite the stormy weather and the challenges it brought, the Hollywood Entertainment District (HED) stood strong in Q1 2024. This resilience is a testament to our ability to navigate choppy real estate waters, instilling confidence in our economic stability as we move forward into the rest of the year.

Kathleen Rawson President & CEO

At A Glance

55,662

Access To Hollywood

Click Here to Learn More

Exciting changes are on the horizon as Hollywood Boulevard sets the stage for a major renovation initiative.

In March, Council District 13 Councilmember Hugo Soto-Martinez unveiled "Access to Hollywood," an ambitious plan aimed at transforming Hollywood Blvd. The plan promises to introduce 3.6 miles of protected bike lanes and implement pedestrian safety enhancements along the Boulevard by 2025.

The initiative is structured into two phases, each targeting the improvement of streetscape accessibility:

PHASE 1:

Streetscape enhancements will prioritize the improvement of travel lanes, pedestrian zones, and the installation of pull-outs for pick-up/drop-off and loading. These enhancements are slated for immediate implementation.

PHASE 2:

The full build-out will include additional features such as protected bike lanes and expanded pedestrian sidewalks. The timeline and funding for this phase are yet to be determined.

THP In The News

In Q1 2024, THP and the HED were featured in several media stories showcasing the forthcoming Hollywood Visitor Center and restroom facility, and upcoming development in the Greater Hollywood area. These stories were published in well-known publications such as the LA Business Journal, The Patch, and Yahoo.com, among others, generating billions of impressions for the region.

LA Rising - Hollywood LA Business Journal, 2/26/24

Rawson Talks Future of Hollywood

LA Rising: Key Hollywood Projects

LA Business Journal, 2/26/24

LA Business Journal, 2/26/24

Modera Hollywood Open For Business

Modera Hollywood by Mill Creek Residential, located at the southeast corner of Argyle and Selma Avenue, is a seven-story building featuring 276 studio, one-, and two-bedroom apartments. Now leasing, homes feature an advanced technology package with Internet-of-Things connected devices. Building amenities include rooftop decks, state of the art fitness center, an entertainment room, and a professional grade recording and HD live streaming studio complete with cameras, microphones, mixers, and speakers. The award-winning leasing deal of the ground-floor grocery store, Bristol Farms, will be coming soon.

Welcome to Hollywood Com2uS

Com2uS, the South Korean gaming and publishing company, is relocating its North American corporate headquarters to Hollywood after a decade in El Segundo. The company has inked a lease for 12,000 SF at the Class A office building, Sunset Media Center at 6255 Sunset Blvd owned by Kilroy Realty. The move will bring approximately 150 employees to the district. Cushman & Wakefield representative Greg Lovett noted that the relocation is “a strategic and trendsetting move” to be closer to a newer and younger generation of game developers and creatives who tend to reside in the trendier and more cutting-edge LA communities, such as Hollywood.

Working in Hollywood - Employee Demos

At its heart, Hollywood is a mecca for creativity and storytelling. Buoyed by a robust entertainment production ecosystem and brandishing a priceless name representing a neighborhood and an industry, Hollywood combines the best of laid-back Southern California culture with dedicated work, creative energy, and drive. While the community is home to a substantial share of entertainment production jobs consistent with its global brand, Hollywood features a diverse employment base. Other major employment clusters include information and technology firms, healthcare, personal and professional services, and abundant retail and food & beverage industry jobs. That diversity of employment translates directly to the diversity of the workforce, which is always on display throughout the neighborhood.

47,936

35,227

EMPLOYEE RACE + ETHNICITY

5,700,000

$90,000

DIVERSE EMPLOYMENT BASE

Hollywood is home to various employment sectors, lending economic resilience to the area.

Q1 HED NON-RESIDENT EMPLOYEE VISITS 2018-2024

Q1 2024 saw 1,509,743 non-resident employee visits to the HED, increasing 6% from last year (Q1 2023), and just shy of the 1,553,129 employee visits in Q1 2019. The 1.5 million Q1 2024 employee visits represents a 93% recovery rate from Q1’s prepandemic average. For reference, Q1 pre-pandemic (2017-2019) total employee visits averaged 1.6 million.

Hollywood Office Market

Available U.S. office space has reached an all time high, topping 1B SF for the first time. This is due to the prevalence of hybrid work (28% nationally) and the current economic climate. In Los Angeles, tenant right-sizing and the aftermath of industry strikes have led to a surge in vacant office space, with overall vacancy rates reaching 24.1% and climbing. Hollywood reflects this trend with a 27.8% vacancy rate, yet the entertainment industry is expected to gain momentum now that

the strikes are over. In terms of leasing activity, Hollywood is trending upward, with 99,270 SF of leasing in Q1 2024. Hollywood's Class A office segment continues to outperform Los Angeles in asking rents ($4.58 vs. $3.64), with a 3.4% QoQ increase in Class A office rents. However, this is below Hollywood’s $5.08 average from Q4 2022 - Q3 2023.

Overall Asking Rents (PSF/monthly)

Class A Asking Rents

+0.2% QoQ (-1.1% citywide)

-6.3% YoY (-8.3% YoY citywide)

Compared to $3.44 Citywide

+3.4% QoQ (-1.4% QoQ Citywide)

-8.6% YoY (-9.2% YoY Citywide)

Compared to $3.64 Citywide

+2.5% QoQ (+1% citywide)

+7.0% YoY (+6.8% citywide)

Compared to 24.1% Citywide

+2.5% QoQ (+1% citywide)

+4.4% YoY (+3.0% citywide)

Compared to 26.1% Citywide

Office Development

1,271,944 1,667,640

DEVELOPMENT HIGHLIGHT

The Star

The proposed 524K SF, mixed-use, Star development has a new design and new architect (Foster + Partners). The 22-story, cylindrical high-rise stitched with colorful gardens spiraling from street to roof features indoor-outdoor work spaces to appeal to the needs of the creative community and innovators that they hope to attract. A rooftop restaurant will also be open to the public. Developer Maggie Miracle said, “We believe Hollywood is a unique and irreplaceable market both geographically and from an industry perspective.” She continued, “The over-the-top design of the Star is intentional. Our goal is to create a landmark building that is synonymous with the images that Hollywood evokes: innovation, creativity, fantasy and imagination.”

Living in Hollywood - Resident Demos

Few places carry the same immediate name recognition or intrigue as Hollywood, attracting a diverse mix of people from all over the globe to live and work in the world’s creative capital. With its central location, modern amenities, and walkable scale as the “most walkable neighborhood” in Los Angeles, Hollywood has its own unique character that appeals to modern-day creatives.

The Hollywood population is primarily renters, has a median age of 36.5, is upwardly mobile, with 54% having a bachelor’s degree or higher and with an average household income of $55,00. Hollywood residents are more likely to take transit, walk, or work from home compared to citywide averages. As a result, there is high demand for living in Hollywood, particularly in the HED.

36.5

$55,053

31,469

22,478 1.67 54% 94%

HED GENERATIONS

Hollywood’s residential population includes a diverse mix of people from all age groups and generations, with millennials being the most well-represented group. It is worth noting that figures indicate that residents desire to remain in their current homes for the next five years.

RESIDENT COMMUTE

RACE + ETHNICITY

HED

Multifamily Market Conditions

7,362 $2,780 6.3% 46,971 $2,296 6.5%

469,723 $2,189 5.7%

Vacancy Rate

Avg. Asking Rent Per Square Foot Cap Rate (YTD)

MULTIFAMILY RESIDENTIAL VACANCY RATES (2010-2024)

While multifamily residential vacancy rates in the HED are higher than in Greater Hollywood and Los Angeles, they often spike in correlation with an increase in deliveries. The 2023 annual average vacancy rate in the HED was 7.4%. The 6.3% Q1 2024 vacancy rate in the HED has leveled to become more on par with that of Greater Hollywood and citywide.

HED

Gr. Hollywood

City of LA

Source: CoStar Group

Greater Hollywood City of LA LA County

Annual Residential Population Change

The HED’s annual population percent change continues to increase at a greater rate compared to regional rates. These figures support the growing demand for multifamily residential options in Hollywood. Over the past decade, the HED has experienced a notable increase in its residential population, with a 19.5% increase since 2010, which is

much higher than the 2.9% growth observed citywide. The district has witnessed an 8% increase in its resident population between 2020 and 2023 alone, while the citywide growth rate essentially stayed the same.

ANNUAL RESIDENTIAL POPULATION CHANGE

CHANGE IN OCCUPIED HOUSING UNITS OVER TIME

City of LA

LA County MSA, Long Beach State of CA HED City of LA

HED Gr. Hollywood

Hollywood Residential Development

The HED offers a diversity of housing options including unique offerings such as micro workforce housing, middle-income housing, coliving housing, affordable housing, market-rate housing, and artist-collective housing. The HED is 94% renters, so this diversity of housing options is crucial. The HED has a 28% increase in occupied housing units from 2010 to 2023, with a 10% increase from 2020 to 2023.

Greater Hollywood has 36 residential projects entitled or under construction, 13 of which are located in the HED. The HED boundaries contain 54% (2,862) of the approximately 5,332 residential units entitled or under construction in Greater Hollywood, reflecting the district’s high density and population growth. Within the HED, 10% (588) of the total residential units planned, entitled, or under construction (5,853) will be designated affordable. When isolating for residential projects that are currently seeking entitlement, 11% (316) in the HED and 25% (1,446) in Greater Hollywood will be affordable.

HED

GREATER HOLLYWOOD + HED

MARKET RATE & AFFORDABLE UNITS PLANNED OR

DEVELOPMENT HIGHLIGHT

1360 Vine - Hollywood Tower

The City Planning Commission approved Onni Group’s 475K SF development in March 2024. The development has two options for development: mixed-use residential or an office tower with ground-floor commercial. The added flexibility to develop the site as an office building reflects Hollywood's real estate market as a hub for creative office space. The residential option is a high-rise with 429 residential units, a 55K SF grocery store, 5K SF of retail uses, and 9K SF in bungalows as either restaurants or residential units. The office scenario is a contemporary high-rise with 463K SF of office uses, 12K SF of restaurant uses, and 9K SF in bungalows for either dining or residential.

Residential Development Updates

Visiting Hollywood - Visitor Demos

For decades, Hollywood has brought joy to so many through the magic of its bedrock roots in entertainment. The neighborhood’s unique blend of creativity and commerce continues to offer one-of-akind experiences for both visitors and residents. While constantly on the cutting edge, Hollywood retains a timeless glamor that permeates

our hotels, restaurants, and attractions. Those who visit Hollywood hail from nearby California cities and faraway countries, as this neighborhood’s many hotels and entertainment destinations appeal to all walks of life.

Pre-Pandemic average represents the annual average of visits from 2017-2019.

Hotel Market Conditions

In Q1 2024, Greater Hollywood saw a 71% occupancy rate, $229 ADR, and $70.9M in room revenue. March is the most active month of the quarter. Over time, the average daily room rate (ADR) for hotels in Hollywood has steadily increased and consistently remains higher than the citywide averages.

Gr. Hollywood

City of LA

HOLLYWOOD HOTEL MARKET OVER TIME

Price Adjusted for Inflation

HOTEL OCCUPANCY RATE HOLLYWOOD VS. CITY OF LA

Hollywood Hotel Development

There are 13 hotel projects underway or approved in Greater Hollywood, collectively poised to introduce 1,220 hotel rooms to the region. Among these developments, 10 projects are exclusively dedicated to hotel accommodations, while 3 are integral components of mixed-use development projects. Notably, the HED accounts for 10 of the 13 projects with hotel rooms, including the proposed Whitley Hotel at 1719 N Whitley Ave, which successfully survived appeal in Q1

2024 and was approved with conditions. The national landscape of hotel construction is witnessing a contraction, characterized by a growing number of projects lingering in the planning phase. However, there have been instances of respite in Hollywood, where select hotel developments, such as the Palmer Hotel and Ivar Gardens, have secured extensions from the City of LA, enabling them to progress.

Top Travel Trends

Domestic Travelers International Travelers

According to the 2023 State of the American Traveler Survey via LA Travel & Convention Bureau (LATCB), there is currently strong consumer interest in travel, despite varying financial challenges. Domestic travelers have specific motivations when choosing when and where to invest their money. Here are some top domestic travel trends for 2023 and beyond.

Los Angeles continues to be a popular destination around the globe, ranking as the #2 most desired U.S. city to visit by international travelers. This is evidenced by a significant 23% YoY increase in international travel to LAX, which saw 20 million visitors in 2023.

Relaxation

Visit Friends & Fam

Escaping Daily Life Stress

Self-Care

Enjoying the Outdoors

Exploration

Dining

Shopping

Sightseeing

Amusement Parks

Beach/Waterfront

Art Gallery/Museum

Nightlife

New York

Los Angeles

Las Vegas

Miami

San Francisco

China

United

Australia

France

South Korea

Retail in Hollywood

Hollywood’s retail market plays a crucial role in the vibrancy of the neighborhood. It offers a vast inventory of 7.2 million SF of retail space, with half of it (3.6 million SF) located in the HED. Currently, the HED has approximately 470K SF of available retail space and an

average asking rent of $41.54 per SF in Q1. Q1 2024 District rents in the HED have decreased by 7% compared to Q1 2023, while they have increased by 3% citywide in the same time period.

GREATER HOLLYWOOD CITY OF LA

3.6 Million 7.2 Million

Million

HED

NEW HED BUSINESSES - Q1

The Spotlight Doner Turco

1601 Cahuenga 6323 Hollywood Blvd

Mars Hollywood

Status Restaurant & Lounge

Iki Nori

Pink Teacup Villa

Kurosh Persian Grill

1545 Wilcox Ave

1612 Cahuenga Blvd

6464 Sunset Blvd

1542 Cahuenga Blvd

Glee + Co

Soigne

Sunset Smoke Shop

Bao Bao House

5960 Sunset Blvd

5849 Sunset Blvd

6655 Hollywood Blvd 6801 Hollywood Blvd

RETAIL VACANCY RATE OVER TIME

Q1 retail vacancy rates have steadily increased since 2020. However, the Q1 2024 retail vacancy rate in the HED remained stable from last quarter from 9.7% to 9.6%, despite having more than 225,000 SF of retail inventory added from last quarter with a positive net absorption of 3,093. HED

Hollywood Retail Development

Mixed-use development is a golden standard in Hollywood. Right now, 57 projects proposed, entitled, or under construction include a retail component. In the HED, this equates to 204K new SF of retail via the mixed-use projects entitled or under construction. In terms of retail spaces for sale, The Cherokee Building on Hollywood Boulevard, a retail landmark investment opportunity, has been listed for sale for $20M after 40 years of consistent ownership.

GREATER HOLLYWOOD + HED

HED

Retail Callouts

Ovation Renovation Earns 2024 CoStar Impact Award

Ovation’s three-year, $100 million renovation project completed in 2023 has earned a 2024 CoStar Impact Award, as judged by a panel of local industry professionals. After buying the property in 2019, Gaw Capital and DJM added new retailers as part of the renovation including Café de Leche, Tacos Neza and a Kylie Cosmetics by Kylie Jenner pop-up shop. The 475K SF property upgrade also included a new comedy club (The Kookaburra Lounge) and another soon-to-beannounced entertainment concept. The property also features a revamped courtyard, a large-scale mural and other architectural upgrades. Foot traffic has increased more than 110% since the renovations, and Ovation Hollywood saw roughly 500,000 visitors in 2022.

Food & Wine Magazine cites Musso & Frank, the Pantages Theater, the Hollywood Bowl, and the Hollywood Sign as their favorite places to eat and explore in Los Angeles (Feb 2024) and names Los Angeles as one of the top 5 U.S. cities for food and drinks (April 2024).

Upcoming Development

The Hollywood Partnership tracks upcoming development regularly to keep you apprised of the latest projects planned or under construction in the HED and Greater Hollywood. Explore our Development Map, or check out our Development Matrix for a quick glimpse.

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To Explore Our Development Map

To View Our Development Matrix

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To View Our Virtual Ecomonic Development Tour

*The Hollywood Partnership tracks development projects that are proposed, fully entitled, and under construction. Information included here reflects the status of each project as of the current quarter, and The Hollywood Partnership makes no representations as to the likelihood of completion for any individual project in light of market conditions.

6922 Hollywood Blvd., Ste. 925 Hollywood, CA 90028

323.463.6767

info@hollywoodpartnership.com

hollywoodpartnership.com