Greater L.A. Market Rents and Demand Increase
- The Greater Los Angeles Basin office market posted positive demand of 763,900 square feet. Vacancy fell 10 basis points to 14.1%.
- Asking rental rate growth recorded 3.4% year-over-year to end at $3.26 per square foot (PSF) full service gross (FSG). This is the lowest rental growth the market has experienced since the second quarter of 2014.
- Activity from entertainment, biotech/healthcare and co-working tenants drove overall leasing activity of 5.6 million SF for the quarter.
- There were 964,900 square feet of construction deliveries, leaving 7.9 million SF currently under construction.
- The Los Angeles Basin unemployment rate rose from last quarter, ending at 4.1%. Total civilian job growth was flat as the economy maintained essentially full employment.
The Los Angeles County office market recorded 657,800 square feet of net absorption. Construction deliveries of 616,600 square feet led to a static vacancy rate of 14.5%. West Los Angeles accounted for 84% of the total demand for the quarter. What effect WeWork’s status has on West and Downtown Los Angeles, which together account for 66% of the co-working giant’s Los Angeles footprint, will bear watching in the quarters ahead. The average asking rental rate recorded $3.49 PSF FSG, as growth slowed to 4.0% year over year. Still, rates increased in every submarket, aside from Hollywood/Wilshire Corridor. Construction remains concentrated in Downtown and West Los Angeles, accounting for 67% of construction in the county.