The Los Angeles County office market continued its tepid but steady recovery last quarter.
The office vacancy rate inched down only three-tenths of a point to 16.9 percent in the quarter ended Dec. 31 compared with the previous quarter, according to data compiled by Jones Lang LaSalle Inc. The rate is down one-fifth of a point from the year-ago period.
Tenants took 687,356 square feet off the market, fueled largely by small and midsize leases across the region. It was the most space absorbed in the county since the first quarter of 2008.
“There were a lot of small to midsize deals in the fourth quarter,” said Michael Soto, research manager at Transwestern’s downtown L.A. office. “There were some large new deals that happened, but for the most part, a lot of the big leases were renewals. The demand overall for the L.A. office market mainly came from small and midsize companies that were confident to expand.”
Video game creator Riot Games Inc. inked the largest deal in the county. It signed a lease to expand by nearly 50 percent to occupy the entire 284,000-square-foot Element LA, a 12-acre media campus in West Los Angeles under renovation by Hudson Pacific Properties Inc. Riot is moving out of popular but crowded Santa Monica, which boasted one of the county’s tightest markets with only 11.2 percent vacancy.
For the Westside as a whole, vacancy was 15.6 percent, a nine-tenths of a point improvement from the previous quarter and the lowest of the county submarkets. In fact, the Westside’s Beverly Hills market posted the county’s lowest rate, 10.1 percent, as buyers scooped up space in the coveted Golden Triangle.
Jim Kruse, senior managing director at CBRE Group Inc., said the Westside might be improving at a more accelerated rate than the rest of the county because it is home to many rapidly expanding tech and media industry companies, but the other submarkets aren’t too far behind.
“West L.A. gets a whole lot of airplay for not only those transactions but for the industries that are leading the way,” he said. “But (the county) is a tale of multiple little cities. Downtown (Los Angeles) is tough, but the rest of the markets have been doing better on a quarter-over-quarter basis.”
Indeed, downtown struggled last quarter as downsizing tenants gave back more than 222,000 square feet. It left the office market with a 19.1 percent vacancy rate, up seven-tenths over the previous quarter.
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