The combined value of sales and lease deals handled by the largest commercial real estate brokerage firms in Los Angeles County eked out a 0.5 percent gain in 2017, reaching $87.5 billion.
The near-flat performance – coming on the heels of a 22.9 percent hike in 2016 and a 13.1 percent gain the prior year – offered a sign that the commercial real estate market might have reached a plateau after a strong and steady run of nearly a decade.
Most of the top 36 brokerages on the Business Journal’s list, ranked by the dollar value of sales and leases in Los Angeles County, remained from 2016. The rankings of several firms changed as the market cooled and some high-earning brokers moved between companies.
CBRE Group Inc., the world’s largest commercial real estate brokerage, reported closing deals valued at $13-plus billion countywide in 2017, down 5.1 percent from the prior year but still a brisk pace – and enough to hold its No. 1 position.
“Overall sales volume reached a peak in 2015 and 2016, driven by the current economic expansion,” said Lew Horne, divisional president of CBRE’s Southern California, Arizona and Hawaii regions. “So, while year-over-year comparisons are slightly down, we’re still transacting at very high levels.”
Among the deals was an 83,000-square-foot lease in August 2017 for Paradigm Talent Agency’s new Beverly Hills office, a deal worth approximately $100 million, according to CBRE.
Deal activity in 2018 shows a still-growing cycle for the office sector despite many brokers’ comments likening the market to “the late innings of the baseball game.”
One of CBRE’s recent deals that illustrates the ongoing growth, according to Horne, was a 66,000-square-foot lease for coworking firm Spaces at the CBRE-owned Univision building in Westchester.
“Office market fundamentals are strong,” Horne said. “Unemployment is low, and there is expansion from tech and media companies focused on content creation.”
The county’s hot industrial market continued its fast pace last year with brokers handling about 11.7 million square feet worth of sales and leases countywide during 2017’s fourth quarter, according to data from No. 4-ranked Jones Lang LaSalle Inc. A land crunch and strong demand for warehouse and distribution space to handle e-commerce shipments continues to squeeze available space this year, leaving only a 1.4 percent vacancy rate in the recent second quarter. The county’s office vacancy rate during that time was just over 14 percent.
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