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2022 Q3 Greater Los Angeles Office Research Report

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2022 Q3 Greater Los Angeles Office Research Report

Year-to-date leasing activity reached 10.5M SF, surpassing the amount recorded this time in 2021 by 7%. Many significant deals in the third quarter were signed by law firms as well as healthcare and tech tenants. Although activity has ramped up compared to the previous two years, office availability hit a record level of 25.7%. This was caused by an uptick in sublease availability, which was up another 30 basis points, reaching 4.5%. This rate has increased for two consecutive quarters and represents 9.9M SF of sublease space on the market. Net absorption was negative 320,793 SF, driving the vacancy rate up 40 basis points to 20.7%. High vacancies caused the average asking rental rate to decrease for the second consecutive quarter.
The Los Angeles office construction pipeline dipped below 3M SF after major projects were delivered in West Los Angeles and Tri-Cities. As demand for office space weakens, developers have been looking for opportunities to convert aging office buildings to residential uses. Many office-using tenants are still facing economic concerns, preventing them from committing to long-term leases. As employers continue the push to get workers back and require more in-office days, leasing momentum could start to build and improve market fundamentals in 2023.

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2022 Q3 Greater Los Angeles Office Research Report

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