We are pleased to report that Mass Appeal, a high-profile New York-based entertainment and media firm, has signed a lease at one of our Opportunity Zone assets in Los Angeles.
Our strategy behind the Fundrise Opportunity Fund has been not only to invest in Opportunity Zones simply for the potential tax benefits, but also to identify properties that we believe offer a strong return in value over the long-term. The successful execution of this new lease speaks to this strategy and gives us further confidence as we continue to seek out additional similar opportunities.
Mass Appeal Records, a high-profile New York-based entertainment and media firm, has signed a five-year lease for one of the Fundrise Opportunity Fund’s Los Angeles properties. By successfully leasing the asset, we anticipate being able to earn a stable cash flow while both neighborhood rents and land values continue to appreciate around us. At the end of the initial five-year term, the structure of the lease gives us flexibility, allowing for the tenant to exercise its option to extend at prevailing market rates, or giving us the opportunity to release the asset at what we expect to be significantly higher market rents.
Right now, the commercial portions of the Culver City-West Adams submarket in which this asset is situated are rapidly changing, particularly as demand extends east from downtown Culver City and the Helms Bakery District, and west from the Arts District. While the Arts District has been a popular boutique strip for years, and Culver City has grown its cachet as a result of high-profile tech companies moving to the area, the eastern periphery of the Culver City-West Adams submarket is increasingly becoming integrated into the corridor’s revitalization. The formerly industrial neighborhood is transforming into a commercial hub that is drawing new demand from creative office, retail, and restaurant tenants.
It’s no surprise that commercial tenants are flocking to the area. For one, the inventory of buildings in the submarket is architecturally unique, encompassing both pre-war structures and mid-century buildings. Many local properties also feature large open floor plates, high ceilings, and exposed trusses – industrial features that have proven to be attractive to creative industry employers, as well as to restaurateurs and retail purveyors, in the past.
The area is centrally located within the city of Los Angeles. The West Adams corridor sits in between expanding Culver City and the University of Southern California, which provides an important talent funnel for area employers, and support for retail demand. In Culver City, companies like SweetGreen, Amazon, Apple, and HBO are all taking significant space – a testament to the corridor’s growing appeal.
Meanwhile, as traffic congestion in the city worsens, our property is just a few blocks from the city’s new light rail line, offering local workers a convenient public transportation connection to LAX, downtown LA, and Santa Monica. Moreover, these lines are still expanding, which should add further value to our property’s location over the years to come.
While the area’s growth is being partly fueled by the fact that it offers a relative rent discount in comparison to more established westside markets like West LA, Playa Vista, Culver City, and Santa Monica, we believe that this corridor offers tremendous growth potential. Rents in this pocket of Mid-City are climbing quickly for office and retail uses. Spillover demand from smaller firms now priced out of Culver City, or in search of raw space, is expected to further this trend.
Entertainment tenants like Mass Appeal Records are already playing a particularly large role in the area’s growth. To quote a CBRE report:
Tech, media, and entertainment have an outsized influence on the local market and account for the bulk of expansion activity in West LA, Hollywood, and DTLA, with overflow moving into the Tri-Cities. The market’s positive net absorption marked gains in 29 of the past 34 quarters [... and] rents’ long-term upswing are 45% above the low point eight years ago [...].
The addition of Mass Appeal Records should not only contribute to this growth, but also position the tenant to benefit from local industry agglomeration.
We look forward to providing you with further updates on the progress of this property. In the meantime, if you have any questions, please feel free to contact us at firstname.lastname@example.org.