Greater Downtown/Arts District Fuels Activity
Key Takeaways:
- Similar to the first quarter, the Greater Downtown/Arts District submarket accounted for the lion's share of leasing volume for the quarter, recording nearly half (49.8%) of all activity.
- Move-ins in the Financial District and South Park submarkets drove demand of 141,000 square feet in Downtown Los Angeles this quarter.
- Vacancy corresponded with a 50-basis-point drop to 18.1%.
- The overall asking rental rate rose to $3.56 per square foot (PSF) full service gross (FSG), an increase of 4.7% year-over-year.
- Immediately after occupying its Ford Factory headquarters building in the Arts District, Warner Music Group purchased the property from developer Shorenstein.
Outlook:
Downtown L.A. vacancy is expected to contract slightly as positive demand counters new construction deliveries. Interest from out-of-market tenants persists, especially in the media and technology industries, and has helped legitimize Downtown Los Angeles as a competitor to markets such as Hollywood and Silicon Beach. The delivery of a slate of new projects in the Greater Downtown/Arts District submarket will continue to exert upward pressure on asking rates, particularly in Class B inventory.
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