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2019 Q2 Greater Los Angeles Basin Office Knowledge Report

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Greater L.A. Market Vacancy and Rents Increase

Key Takeaways:

  • The Greater Los Angeles Basin office market posted positive demand of 185,400 square feet. However, construction deliveries totaling 512,500 square feet pushed vacancy up by 30 basis points to 14.2%.
  • The construction pipeline nearly replenished itself, with just over 400,000 square feet of inventory breaking round in the second quarter. Of that total, 45% will expected to deliver in 2019, followed by 49% in 2020.
  • Asking rental rate growth increased at a rolling four-quarter average of 1% to end at 3.24 per square foot (PSF) full service gross (FSG). This is a 4.1% gain over last year.
  • Strong activity from healthcare, legal and co-working tenants helped push leasing to 6.2 million square feet for the quarter.
  • The Los Angeles Basin unemployment rate fell from last quarter, ending at 3.8%. Total civilian job growth was 0.3% as the economy maintained essentially full employment.

Outlook:

The Los Angeles County office market recorded 59,000 square feet of net absorption and 94,900 square feet of deliveries as the total vacancy rate rose to 14.4%. Positive movement in the West and Downtown L.A. markets stemmed a tide of space givebacks in the South Bay market. Rental rate growth continued to rise, increasing by 5.1% year over year to $3.48 PSF FSG. Every Los Angeles County submarkets saw rates increase. Construction activity remains concentrated in Downtown and West Los Angeles, accounting for 64% of construction in the county. Los Angeles County non-farm unemployment in May 2019 recorded 4.4%. Over the past 12 months, Los Angeles County gained 58,900 non-farm jobs for an increase of 1.3%.

 

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2019_Q2_Office_Basin

2019 Q2 Greater Los Angeles Basin Office Knowledge Report

Download Report