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10/10/16
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Los Angeles has been invigorated by the golden touch of increased construction and redevelopment, particularly in downtown areas such as the Jewelry District, where landlords are capitalizing on the resurgence. Investors continue to eye strings of historic buildings and industrial space, which has led to sparkling sales activity and creative office conversions throughout the downtown districts.
Q3 results show that downtown Los Angeles remains a positive market for investors, with rents increasing and less vacancy, according to Eric Kenas, Cushman & Wakefield Market Director for downtown Los Angeles.
On a gradual increase, the Los Angeles market’s overall asking rents were up nearly 4.0% year over year in downtown Los Angeles to $3.35/sf/mo, as well as up almost 6.0% in Los Angeles Metro to $2.89/sf/mo.
Class A rents on the Westside continue to post strong rental increases at nearly 9.0%, to close the quarter at $4.29/sf/mo. Santa Monica jumps to the top of the list with the highest asking rents in the region at $5.01/sf/mo, surpassing Beverly Hills ($4.95/sf/mo) and followed by Hollywood ($4.62/sf/mo).
“This jump for Santa Monica is telling of the strength of the tech and creative companies, which tend to cluster in the western markets,” Mr. Kenas explained.
Q3 points to a drop in vacancy, showing more spaces being leased versus the space being placed back on the market.
“Available sublease space in downtown Los Angeles has increased significantly, reaching 135.6k sf, to just over six times the amount compared to this time last year,” said Mr. Kenas. “Those subleasing tend to be tenants who have made other commitments to occupy new space and have term left on their existing lease, such as Netflix.”
Andrew McDonald, Cushman & Wakefield’s Managing Principal in Greater Los Angeles, said Q3 results demonstrate that Greater LA remains in a robust commercial real estate cycle.
“Investor activity continues its upward trend and is outpacing that of last year with 11.5 msf sold year to date, a 35% uptick quarter over quarter.”
In response to the burgeoning market potential, Mr. McDonald stated that Cushman & Wakefield had accelerated the pace of Los Angeles brokerage professional new hires.
“It’s a busy time for the commercial real estate sector, and we’ve built our team on a foundation of industry veterans coupled with a steady stream of competitive new hires to capitalize on this increased activity and to best service our clients,” Mr. McDonald added.
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