Office Woes
It was a tough fourth quarter for L.A.’s office market. Countywide, the vacancy rate was 22.5%, up from 20.2% this time last year, according to data from Jones Lang LaSalle Inc. More startling are net absorption numbers. Negative 1.4 million square feet was absorbed by the market in the fourth quarter, meaning less office space was occupied. But there’s been a bright spot: medical office space. The sector is still seeing high levels of interest.
Inside this Section:
DOWNTOWN
OFFICE MARKET AT A GLANCE
INVENTORY: 31.2 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $3.86
NET ABSORPTION: (55,092) square feet
VACANCY RATE: 22.7%
Downtown’s fourth-quarter office vacancy rate fell to 22.7%, down from 22.1% the previous quarter and 21.2% the previous year. There was no office product under construction during the quarter and negative 55,092 square feet of space was absorbed in the market. Asking rents were up 4 cents quarter over quarter and 3 cents year over year to $3.86 a square foot.
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HOLLYWOOD
OFFICE MARKET AT A GLANCE
INVENTORY: 4.8 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $5.13
NET ABSORPTION: (15,450) square feet
VACANCY RATE: 27.6%
Hollywood’s office vacancy rate rose to 27.6%, up from 27.3% the previous year but down from 29.2% the previous year. Rents fell 24 cents quarter over quarter and 8 cents year over year to $5.13 a square foot. Net absorption was negative 15,450 square feet. There was no construction during the quarter.
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WESTSIDE
OFFICE MARKET AT A GLANCE
INVENTORY: 53.7 million square feet
UNDER CONSTRUCTION: 1.7 million square feet
CLASS A ASKING RENTS: $5.48
NET ABSORPTION: (308,495) square feet
VACANCY RATE: 22.1%
The Westside office vacancy rate rose to 22.1%, up from 20% the previous quarter and 18.5% the previous year. Asking rates for Class A space on the Westside was $5.48 a square foot, down 3 cents over the previous quarter and 14 cents over the previous year. There was 1.7 million square feet of office space under construction and negative 308,495 square feet of net absorption on the Westside during the quarter.
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SANTA CLARITA VALLEY
OFFICE MARKET AT A GLANCE
INVENTORY: 2.6 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $2.83
NET ABSORPTION: (14,492) square feet
VACANCY RATE: 22%
Santa Clarita Valley’s office vacancy rose to 22%, up from 21.4% the previous quarter but down from 22.1% the previous year. Net absorption was negative 14,492 square feet and there was no office product under construction. Asking rents rose 3 cents quarter over quarter but fell 4 cents year over year to $2.83 a square foot.
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SAN FERNANDO VALLEY
OFFICE MARKET AT A GLANCE
INVENTORY: 32 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $2.94
NET ABSORPTION: (444,889) square feet
VACANCY RATE: 21%
San Fernando Valley’s office vacancy rate rose to 21%, up from 19.7% the previous quarter and 18.9% the previous year. Rents fell 2 cents quarter over quarter but held steady year over year at $2.94 a square foot. Net absorption was negative 444,889 square feet. There was no construction during the quarter.
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TRI-CITIES
OFFICE MARKET AT A GLANCE
INVENTORY: 4.9 million square feet
UNDER CONSTRUCTION: 881,200 square feet
CLASS A ASKING RENTS: $3.74
NET ABSORPTION: (482,215) square feet
VACANCY RATE: 21.6%
Fourth-quarter office vacancies increased in the Tri-Cities submarket of Burbank, Glendale and Pasadena to 21.6%, up from 19.6% the previous quarter and 15.5% the previous year. Negative 482,215 square feet was absorbed into the market while 881,200 square feet was under construction. Rents increased 2 cents quarter over quarter and 7 cents year over year to $3.74 a square foot.
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WILSHIRE CORRIDOR
OFFICE MARKET AT A GLANCE
INVENTORY: 11.4 million square feet
UNDER CONSTRUCTION: 0 square feet
CLASS A ASKING RENTS: $2.57
NET ABSORPTION: (112,758) square feet
VACANCY RATE: 32.7%
Wilshire Corridor’s fourth-quarter office vacancy rate rose to 32.7%, up from 31.5% the previous quarter and 29.4% the previous year. Negative 112,758 square feet was absorbed in the market and no new office product was under construction. Asking rents increased 1 cent quarter over quarter and year over year to $2.57 a square foot. Asking rents in Miracle Mile was much higher at $4.44 a square foot.
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SOUTH BAY
INDUSTRIAL MARKET
INVENTORY: 197 million square feet
UNDER CONSTRUCTION: 2.3 million square feet
ASKING RENTS: $1.90
SALES & LEASES: 2.6 million square feet
VACANCY RATE: 1.5%
South Bay’s industrial market vacancy increased to 1.5%, up from 0.8% the previous year and quarter. Roughly 2.3 million square feet was under construction while 2.6 million square feet sold or leased during the quarter. Rent fell 4 cents quarter over quarter but rose 50 cents year over year to $1.90 per square foot.
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SAN GABRIEL VALLEY
INDUSTRIAL MARKET
INVENTORY: 154 million square feet
UNDER CONSTRUCTION: 3 million square feet
ASKING RENTS: $1.74
SALES & LEASES: 4.5 million square feet
VACANCY RATE: 1.4%
The San Gabriel Valley’s fourth-quarter industrial vacancy rate increased to 1.4%, up from 0.9% the previous quarter and 0.7% the previous year. Asking rents were $1.74 a square foot, steady quarter over quarter but up 69 cents year over year. Roughly 4.5 million square feet sold or leased during the quarter and 3 million square feet was under construction.
