The market was in negative territory despite some megadeals, such as a 15-year, 135,000-square-foot lease signed by PricewaterhouseCoopers at 601 S. Figueroa St. But that transaction actually represented a net loss for downtown, since the accounting firm will downsize from 160,000 square feet in Two California Plaza at 350 S. Grand Ave.
That reflects the new normal for large firms that have emerged from the recession looking to cut costs and take up less space, said Jonathan Larsen, regional managing principal at downtown commercial real estate services firm Cassidy Turley.
“A lot of the corporate tenants are shrinking 10 to 20 percent and trying to fit more people in less space,” he said.
They’re doing it with some creativity of their own. For example, some are doing what is known as hoteling, in which a company uses less space by having employees work from home some days and use temporary workstations when they come into the office.
Besides downtown, another laggard was the Wilshire Corridor, where tenants in the Park Mile neighborhood put space back on the market as they fled to neighboring areas.
Still, some experts aren’t discouraged by the slow growth in the quarter. Larsen expects a pickup in deal activity next quarter as firms close year-end deals. Prospective tenants might also want to get ready to get back to business when the economy picks up steam.
“People are saying, ‘Let’s be optimistic,’” he said. “A lot of the companies are financially doing well – they may have less space and people – but they want to be prepared and ready to go and not distracted by their facilities.”
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