Creative Industries Keep LA's Office Recovery Stalled While Westside Finance And Law Power Ahead
Los Angeles is once again the outlier in the national office recovery. While vacancy tightened in more than half of major U.S. markets in Q2, LA’s rate climbed to 25.8%, driven by steep emptying in Downtown and Hollywood even as Century City pulls in tenants.
The divide underscores a structural challenge in LA’s office market: The city’s creative-heavy tenant base, including streaming, tech and entertainment firms, has been far slower to return to offices than the financial and legal users fueling absorption on the Westside.
“We are a market that thrives on creativity,” CBRE Vice Chair Jeff Pion said. “The entertainment industry, technology, media — we have a lot of creative workers in Los Angeles, and that is probably the reason that we have been slower to recover versus places like New York and Dallas and other markets that have a propensity of financial institutions.”
Office vacancy in the second quarter rose 1.5%, according to CBRE. Downtown vacancy reached 35.3%, and the Hollywood/Wilshire Corridor reached 28%.
Century City and the Westside generally continued to be a bright spot in the region, with the vacancy rate standing at 23%, Pion said.
“The quality of the assets on the Westside, certainly the quality of the assets in Century City, are two of the primary drivers why we have seen an uptick in absorption and occupancy,” Pion said.
West Los Angeles accounted for 38.4% of regional leasing activity, motivated in large part by Century City. Three of the top 10 leases in the quarter — including the second-largest lease of the quarter, PwC’s 138K SF deal at 2121 Avenue of the Stars — were move-ins to Century City.
“During the course of the pandemic, you have seen financial services and law continue to be really strong users of office space, and those are the primary tenants that comprise Century City,” Pion said.
Citywide, overall demand faces challenges. Negative absorption totaled 432K SF in the second quarter and about 3M SF over the last 12 months, according to CBRE.
Absorption was driven largely by negative 165K SF in the South Bay, negative 87K SF in the Hollywood and Wilshire Corridor submarket, and negative 84K SF in Downtown.
Total leasing activity in LA hit 4.5M SF in the second quarter, a 12.4% decline from 5.1M SF in Q1 but up from 3.8M SF in Q2 2025.
Financial services firms have been among the most aggressive in pushing employees back to the office, a dynamic that has helped stabilize occupancy in markets with heavy concentrations of banking and legal tenants.
In New York, where Wall Street’s in‑person culture has reasserted itself, office usage has climbed steadily and helped offset weakness from tech and media. Major banks have largely mandated three to five days a week on-site, creating a more predictable demand base than LA’s creative industries.
