Office Vacancy is Rising in Los Angeles County as New Construction Comes Online
Los Angeles, CA, Tuesday, July 25, 2017– According to research provided by NAI Capital, in the second quarter of 2017 the Los Angeles Office market vacancy rate ticked up 10 basis points to 11.4% as 705,454 square feet of office space was completed this quarter, including the first new office tower constructed in Downtown in over 30 years. The 73-story 372,775 square foot Wilshire Grand Center opened its doors this quarter. Average asking direct rental rates in Los Angeles County registered $3.02/SF, steady over the prior quarter, up 6.3% over last year. The average asking rent for class A office space in Los Angeles County is up 7.5% over last year, while class B is up 2.7% over the same period. New construction is driving up the average asking rent for class A office space.
According to Joseph Faulkner, Executive Managing Director with NAI Capital’s Downtown office, “The office market continues its impressive performance. Hollywood is still exploding, Westside rents are still at all-time highs and Downtown is getting more hard looks from tech and media firms. Tenants will have sticker shock when facing renewals and the creative office phenomena will continue to squeeze more people into less space to afford rent.”
Sales activity this quarter totaled 5.7 million square feet compared to last quarter’s 6.5 million square feet, and 8.4 million square feet sold last year at this time. The decline in sales square foot volume is attributed to lack of product for sale and rising sale prices. The average sale price for office space sold in LA County is up 31% over last year.
Despite new construction delivered this quarter, occupancy rates have remained relatively steady as a strong jobs market continues to drive demand for office space. Approximately 4.6 million square feet of office space remains under construction. Year-to-date, as of the second quarter of 2017, completed new construction totaled 1.5 million square feet. As new construction is delivered to the office market, vacancy rates will inch upward.
To access the full Los Angeles Office Market Outlook report, visit:
About NAI Capital
NAI Capital is the largest independently owned full service commercial real estate firm headquartered in Southern California. As one of the largest members of NAI Global, the premier managed commercial real estate service network with 400 Offices and 7,000 market leaders spanning the globe, NAI Capital provides a complete range of transaction, valuation, investment, property management and consulting services. By leveraging our local expertise with our global reach, NAI Capital offers innovative, customized solutions and seamless service to owners, tenants, investors and developers throughout Southern California. NAI Capital clients have built their businesses on the power of our expanding network. We are a dynamic growing commercial real estate company. At NAI Capital we work together putting our clients first.
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To learn more, visit www.naicapital.com
About NAI Global
NAI Global is a leading global commercial real estate brokerage firm. NAI Global offices are leaders in their local markets and work in unison to provide clients with exceptional solutions to their commercial real estate needs. NAI Global has more than 400 offices strategically located throughout North America, Latin America, Europe, Africa and Asia Pacific, with over 7,000 local market professionals, managing in excess of 425 million square feet of property. Annually, NAI Global completes in excess of $20 billion in commercial real estate transactions throughout the world.
NAI Global provides a complete range of corporate and institutional real estate services, including brokerage and leasing, property and facilities management, real estate investment and capital market services, due diligence, global supply chain and logistics consulting and related advisory services.
To learn more, visit www.naiglobal.com.
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