Los Angeles Office Market
First quarter’s leasing activity was mostly expiration driven. Tenants, on average, are reducing their footprints by 15-20% when their leases come due. Media and technology drove new leasing activity prior to COVID-19; this is no longer the case in today’s higher cost debt environment amid industry-restructuring.Total vacancy and availability continued to climb to new highs, reaching 23.8% and 28.9%, respectively.Available sublease grew by 540,720 SF over the course of the quarter to reach 11.5 MSF, yet another record high. Sublet availability will fluctuate throughout the year.Market conditions will be soft for the foreseeable future since all industries are in cost-cutting mode. Most tenants will reduce their footprints as they pursue trophy space.
Download Los Angeles Office Market Report 1Q24Los Angeles Industrial Market
Leasing activity continues to ebb while term lengths decline. Stubbornly high rents, a cooler retail sales outlook and elevated costs of doing business are limiting tenant demand. Net absorption was negative for the seventh consecutive quarter, while vacancy climbed to a 12-year high of 3.0%. Sublet availability increased 2.0% over the preceding quarter to reach 9.3 MSF. Class A infill start rents were down 12.5% from six quarters ago. A drop, but not a severe one when considering rents grew by 112.6% from early 2021 to late 2022. The construction pipeline (6.7 MSF) has narrowed since the third quarter of 2023. Forty-three buildings are underway and only one (86,950-SF) has pre-leased.
Download Los Angeles Industrial Market Report 1Q24