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Los Angeles Office Market

Average Asking Rent (Price/SF/Mo) $3.16
Vacancy Rate (%) 14.2%
Net Absorption (SF) 437,843

Net absorption was positive for the 18th consecutive quarter. Although gains were recorded, the second quarter's activity of 410,036 square feet was flat compared with one year ago. Absorption gains aside, vacancy remained unchanged from the prior quarter, as the newly renovated Ford Factory building delivered vacant in the Arts District this quarter. Warner Music Group will take occupancy of the 257,028-square-foot building in August. Many traditional occupiers such as banks and law firms continued to right-size, while tech, new media and co-working tenants expanded. During the quarter, Fandango expanded into 96,000 square feet in Beverly Hills, WeWork took 74,730 square feet in Burbank, and Edmunds leased an additional 62,558 square feet at its current Santa Monica address. Santa Monica accounted for 44% of Greater Los Angeles' second-quarter net absorption activity. Culver City, a competitive rent option in Silicon Beach, was home to the quarter's largest lease when HBO committed to 128,000 square feet. HBO will relocate when its current lease for 129,000 square feet at Colorado Center in Santa Monica expires in 2019. The overall average asking rent of $3.09/SF was up 2.3% from one year ago but was unchanged from the prior quarter. Available sublease space was up 6.8% from one year ago. Although it increased, sublet space represented just 2.1% of existing inventory; this is in line with the 10-year average of 2.2%.

Los Angeles Industrial Market

Average Asking Rent (Price/SF/Mo) $0.75
Vacancy Rate (%) 0.9%
Net Absorption (SF) 244,110

Vacancy remained under 1.0% for the eighth consecutive quarter, while the total average asking rent was up 10.5% from one year ago. Asking rent averaged $0.75/SF, 7.1% higher than last cycle's high (reached in the first quarter of 2008). Net absorption totaled 244,110 square feet, a sharp decrease from the 1.4 million square feet recorded one year ago. Large block space options in functional buildings are few, renewals are very common, and vacancy is limiting absorption's momentum. New construction is finding occupiers. Nearly 5.5 million square feet has delivered since 2016. Of this, 76.0% has leased or sold to date. Under construction activity reached 8.0 million square feet, a new record high for Los Angeles. Loaded inbound cargo through the ports of Los Angeles-Long Beach was up 5.3% in the first five months of 2017 compared with the same period one year ago. More goods flowing into Southern California ultimately favors demand for warehouse space. Net absorption gains were recorded in South Bay and San Gabriel Valley, while losses occurred in Central and Mid-Cities. In a tight market, a few large move-ins and outs can influence totals.



Los Angeles Office Market Report
2Q17
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Los Angeles Industrial Market Report
2Q17
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