25% of Office Space in Los Angeles is Available for Lease
Los Angeles overall office availability increased by 100 basis points over the quarter to 25.4%. The sublease availability rate had been trending down over the past several quarters but ticked back up to 4%, caused by an influx of sublease offerings in San Fernando Valley. This is an increase of 30 basis points and back to the record levels we saw a year ago. Net absorption was negative 692,826 SF with occupancy losses in most office markets. This, along with major construction completions in West Los Angeles, increased the overall vacancy rate by 60 basis points to 20.3%. Leasing has been picking up and Q1 finished with 3.5M SF of activity, 36.5% more than the 2.4M SF recorded in Q1 2021. Office leasing continued to be led by large deals in West Los Angeles, where 41% of activity occurred. The top leases were signed by tenants in the media and entertainment industries as well as retail giants. Although leasing was still well below the pre-pandemic quarterly average, the average asking rent increased by 1.1% largely due to new supply of Class A projects and space availability. Approximately 65% of the development pipeline containing 4.5M SF of new construction and major renovations have a target completion in 2022. Landlords are remaining generous with concessions to keep occupancy and rental rates high.