Greater Los Angeles Office Overview
The greater Los Angeles office market weakened further as the overall vacancy continued to rise, reaching 19.8%. Although this is the highest vacancy rate in decades, sublease availability has stabilized and remained at 3.9%. This rate is unchanged from the previous quarter, as tenants withdrew existing sublease offerings and fewer tenants added new availabilities. Leasing momentum ramped up and the year-to-date total of 9.3M SF has outpaced the amount recorded this time last year by 33.4%. This is still much lower than pre-pandemic averages and significant leasing volume is needed to make up for the occupancy losses over the past six quarters. Another 1.3M SF of negative absorption in Q3 brings the year-to-date total to over 5.1M SF. Landlords held their rates and chose to be more generous with concessions, which kept the average asking rent flat over the quarter at $3.71 PSF per month. Most of the significant leases signed in Q3 were in West Los Angeles and South Bay, many of which were subleases and deals with flex space operators. While leasing has increased, vacancy is expected to rise and remain high over the next few quarters, with a full recovery contingent on the evolving public health.