As the surge of technology and entertainment companies continues into Los Angeles and the Westside, in particular, vacancy rates have dropped dramatically and rental rates have increased, pressing many smaller firms to look at sites in what have been non-traditional markets where they can house their operations, according to a new study by Colliers International.

The brokerage firm’s most recent market survey shows that topping the list of the most popular Westside submarkets among the smaller tech and entertainment companies has been Culver City, where developers are turning World War II-era buildings into creative office space at affordable rents.

Two recent transactions exemplify this trend: XYZ Films and AdKarma Digital Advertising are among the latest companies to sign leases at the massive bLAckwelder Project in Culver City, Colliers has reported.

Bounded by La Cienga Boulevard and Blackwelder Avenue, the 25-building center, a former World War II-era industrial park, has been upgraded and now features so-called “creative office space” that appeals to those tenants in the fields of high-tech, gaming, film production, graphic design, art and digital advertising, according to Colliers Associate Vice President Tim Dwight, who represented both tenants in their lease negotiations.

“This area has just exploded among smaller entertainment industry tenants who are seeking real ‘creative’ office space in a central location and at per-square-foot costs that are economical yet still retain the elusive cool factor that is so important to the industry,” said Dwight. “With higher-priced space available in the nearby submarkets of Playa Vista, Venice and Santa Monica, this is a viable alternative. This is not just traditional office space where the ceilings have been exposed and an owner than slaps a sign on it describing it as creative office space. This is the real thing from top to bottom.”

bLAckwelder has completely converted the mostly brick and metal buildings that were once used to support the war effort during World War II and, later, to house light industrial manufacturing. Still later, a host of other businesses as diverse as auto repair shops, warehousing, catering and even a well-known dance studio, were tenants, Dwight noted.

After bLAckwelder converted the buildings to house this latest generation of tenants, the companies began arriving. In this latest example, XYZ Films leased 3,200 square feet of creative office space where it will base its Los Angeles production and film distribution operations. Term of the lease was five years with a total consideration of $1 million. AdKarma, which specializes in digital or online advertising for film and other entertainment-related clients, signed a five-year lease for 2,400 square feet. Total consideration was approximately $500,000.

“During the past few decades, the area was considered a third-tier location because its traditional industrial base had fled the area or closed their now obsolete businesses, leaving many buildings vacant or with a less than ideal mix of tenants,” he said. “Then, with the development of Playa Vista just west of the center, and the higher prices demanded there and in Santa Monica, smaller high-tech and entertainment tenants started looking for an alternative. bLAckwelder filled the vacuum by acquiring the center and offering space that was different – brick and metal facades, exposed ceilings and space that was easily converted to creative uses – all in a location that is central to mass transit options and, of course, to the freeways that run through or adjacent to Culver City.”