The trends of H2 2020 continue
The Greater Los Angeles office market consists of 210.4 MSF of inventory across seven major submarkets. Overall vacancy reached new records and is 50 basis points higher than the previous peak in 2013 when it reached 17.8%. Vast amounts of space being returned to the market over the past few quarters pulled the overall average asking rate up by 4.4% year-over-year to $3.54 PSF per month. Rent growth during this period was strongest in South Bay where Beyond Meat signed the largest deal. This 281,110-SF lease helped push Greater Los Angeles leasing activity to 1.9 MSF, similar to the total recorded in the previous quarter but short of the 2020 quarterly average of 2.4 MSF. There are 5.5 MSF of new office projects in the development pipeline, which is up by 6.7% from one year ago.
Many firms with upcoming lease expirations have opted to delay commitments with short-term renewals. While market fundamentals have weakened significantly, the federal boost for the COVID vaccine roll-out is driving optimism. This should give tenants the confidence to move forward with their plans and spur more office demand.