With the economy still weak and corporate profits largely derived from reduced expenses, the downtown L.A. market put in a weak showing in the third quarter.

The vacancy rate ticked up to 14.6 percent, as the market gave back more than 94,000 square feet, according to Grubb & Ellis Co. That’s not as bad as the second quarter, when more than 168,400 square feet came back onto the market. But it’s a sign that downtown still hasn’t staunched the bleeding.

Part of that stems from the fact that employers such as law and financial firms are looking to cut back on leasing expenses, even if they’ve finished much of their staff downsizing.

Whitley Collins, a regional managing director in downtown for Jones Lang LaSalle, said his company is representing three downtown law firms that each want to reduce their footprint by 20 percent to save money.

“I’m not talking to a single company that isn’t talking about a way to be more efficient with their space,” Collins said.

As a result, asking rents in the submarket – which had been holding relatively steady – dropped 11 cents from the second quarter to $3.22. Brokers warned that even that rate is largely a mirage: Landlords have had to give up so much in concessions, such as free rent and building improvements, just to retain tenants that some are barely breaking even.

“Asking rents are (small) compared to everything else that’s in a deal,” Collins said.

And as tenants cut back, more sublease space is creeping onto the market. So far, brokers are seeing sublease space trickling out in increments of about 20,000 to 25,000 square feet, too low to impact substantially rental rates – so far.

“It’s nothing hugely negative to push the needle into the red, but it’s something we’re all keeping our eyes on,” said John Zanetos, a vice president at the downtown office of CB Richard Ellis Group Inc.

MAIN EVENTS

• International law firm McKenna Long & Aldridge LLP signed a 13-year lease for 62,418 square feet at One California Plaza. The deal is valued at more than $30 million. The 42-story high-rise at 300 S. Grand Ave., which is up for sale by owners Maguire Properties Inc. and Macquarie Office Trust, is now 78 percent leased. McKenna Long was previously at 444 S. Flower St.

• The U.S. General Services Administration inked a $14.4 million lease renewal and expansion at 606 S. Olive St. The six-year lease includes a 13,000-square-foot expansion, giving the GSA 72,210 square feet at the property. The GSA uses the space to house the Executive Office for Immigration Review.

• Regent Systems signed a six-year lease for 54,000 square feet at the Gas Company Tower. The 555 W. Fifth St. building is owned by Maguire Properties. Headquartered in Dayton, Ohio, Regent Systems is an information technology company that counts MGM Mirage and Proctor & Gamble as clients.

• Gerald J. Sullivan Associates, a consortium of insurance companies, executed a five-year renewal for 24,034 square feet of headquarters space at 800 W. Sixth St. Sullivan Associates consists of eight independent insurance companies.

• Protiviti Inc., an international risk and business consulting firm, signed a five-year lease for 12,599 square feet at 400 S. Hope St. The property is managed by Tishman Speyer.

Office Market At a Glance

Inventory: 32.1 million square feet

Under Construction: 0

Class A Asking Rents: $3.22