• Direct market vacancy in Los Angeles currently stands at 14.2%.
• Average asking rates were at $3.52/SF on a full-service basis.
• In 4Q2022, 639k sf was delivered, while 3.8 msf is still under development.
The Los Angeles office market stands out among other major markets in the nation due to the decentralized nature of its office assets. The city's expansive layout and well-earned reputation for having some of the highest traffic in the country has led to this. The most prestigious office buildings can be found in long-established corporate submarkets with a reputation for drawing in more traditional and image-conscious tenants.
Rents have remained static. Many landlords are still steadfast with their asking prices, indicating a certain amount of optimism that more robust tenant demand will soon return. Some submarkets that provide relative values have done better than others throughout this time.
In November 2022, the adjusted unemployment rate in Los Angeles County was 4.5%, down from 6.2% the previous year.
Trade, transportation, and utilities have seen the most substantial increase in employment from one month to the next, up 11,500 jobs. Retail trade, the last stage in the distribution of goods, took the lead in the increase with an increase of 8,700 jobs, followed by local government management.
Near Term Outlook
There is some positive news as several significant tenants have just signed long-term leases, signaling their commitment to keeping an office in the city, despite some companies still delaying their space decisions.
In the California Market Center at 110 E 9th St in Downtown Los Angeles, Forever 21 and Adidas America committed to 162k sf and 107k sf, respectively, making them two of the biggest office leases executed this year since the start of the epidemic.
Report provided by: Kidder Mathews Director of Research Gary Baragona
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