Hudson Pacific Properties (HPP) Citi’s 30th Annual Global Property CEO Conference 2025 summary

Market trends and portfolio positioning

• Office market headwinds are easing, with improved leasing momentum expected through late 2025 and 2026.

• 85% of assets are Class A in core West Coast markets, with minimal deferred maintenance due to capital investments during 2021-2022.

• Vacancy is projected to reach industry lows by year-end, with tours and leasing activity at record highs.

• Leasing absorption is outpacing space roll, supporting a positive outlook for occupancy.

• Office fundamentals appear to have bottomed, with tech layoffs subsiding and increased demand for space, especially in AI-driven Bay Area markets.

Leasing, renewals, and transaction activity

• Tenant improvement (TI) allowances for new Class A leases are stable at $150/sq ft, with renewals much lower.

• 16% of space expires in 2024, with 55% already secured for renewal; mark-to-market rents expected to be down slightly, by about 3%.

• Over $1 billion in asset sales completed in the past two years, with $150 million more targeted for 2024, primarily lower-quality assets.

• Buyers have mainly been user groups and family offices, with limited foreign interest except for top-tier assets.

Studio platform and industry outlook

• Studio show counts are recovering, with holds and leasing activity increasing, especially in Los Angeles and New York.

• Sunset portfolio is 85% leased, while Quixote is at 30-35%; utilization is below pre-strike levels but expected to improve by 2026.

• Content spend by major streamers remains robust, with new live content facilities being developed in Los Angeles.

• The Quixote platform is seen as accretive long-term, with cost reductions and high market share positioning it for future profitability.