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Tuesday, Jan 31, 2023
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Real Estate Quarterly: January 2023

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:

Sluggish Quarter

Medical Miracle


 

DOWNTOWN 

OFFICE MARKET AT A GLANCE

The Thea in downtown sold for $504 million.

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

6922 Hollywood Blvd. in Los Angeles. (Photo by Ringo Chiu)
Harbor Associates purchased 6922 Hollywood Blvd.

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

A pair of apartment complexes sold in Brentwood.

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

RETAIL SALE PRICE: $20 million
ADDRESS: 24075 Magic Mountain Pky. 
A Valencia dealership at 24075 Magic Mountain Pky. 

(Photo by Ringo Chiu)
24075 Magic Mountain Parkway in Valencia.

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

Janss Marketplace in Thousand Oaks.

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

2901 Thornton Ave. in Burbank.

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

The 464-unit The Vermont in Koreatown sold for $235 million.

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

5000-5001 Airport Plaza Dr. in Long Beach.

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

A four-building industrial park in the City of Industry.

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.  

Paola Mendez
Paola Mendez
Paola Mendez graduated from Los Angeles Valley College, then transferred to University of California, and now serves as a Receptionist and Office Assistant to the Los Angeles Business Journal. Paola wears many hats in different departments and is trilingual in English, Spanish and French.
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