Downtown LA's Office Market Still Has A Long Way To Go
Although Downtown LA office vacancy has declined over the last year, from 20.4% to 18.4%, it's still significantly higher than LA office vacancy overall, which was just 15.1% in Q3 15, according to the Downtown Center BID (DCBID).
The DCBID report attributed the continued high vacancy to downsizing of space per employee by traditional office users, finance, insurance and real estate. The report noted, however, that office tenants moving into Downtown from other LA submarkets over the last year took up 800k SF of vacant space. Additionally, many of Downtown’s top office buildings were being upgraded by new owners and are beginning lease-up with higher rents.
Meanwhile, Downtown leasing is headed in the right direction with leasing volume up 54% year-over-year, according to GlobeSt. Leasing during Q3 comprised 2M SF, which generated more than 107k SF of net absorption. Companies signing leases in Q3 include WeWork, CrossCampus, DLR Group and the law firm Fragomen, Del Rey, Bernsen & Loewy. Additionally, large office leases signed this year include a 305k SF lease by Capital Group and a lease for 215k SF by Lewis Brisbois. [GS]