Law firms drive DTLA sublease drop: down 24% from peak, yet still 269% above pre-pandemic

Law Firms Drive DTLA Sublease Drop: Down 24% from Peak, Yet Still 269% Above Pre-Pandemic
Law Firms Drive DTLA Sublease Drop: Down 24% from Peak, Yet Still 269% Above Pre-Pandemic
  • DTLA sublease vacancy fell 24% from its Q3 2023 peak (676k SF) to 518k SF by Q2 2025, signaling stabilization. Law firms drive 23% leasing activity including Manning & Kass’s 40K SF renewal at 801 Tower and Cooley’s 28K SF new lease at 2 Cal. Plaza via strategic renewals and flight-to-quality moves.
  • Legal tenants accelerate absorption through footprint reductions, with 40% of law firms downsizing nationally. Hill Farrer & Burrill’s 25% contraction at City National Plaza exemplifies this trend, leveraging discounted premium space. Despite progress, sublease volume remains 269% above pre-pandemic levels, reflecting unresolved market imbalance.
  • While sublease vacancy dropped 7.3% quarter-over-quarter in Q2 2025, recovery remains uneven. Law firm demand (>383k SF leased) contrasts with persistent 31% overall vacancy in DTLA. Conversion projects (e.g., 1055 W. 7th St. to apartments) and $3.68B in maturing debt highlight ongoing market recalibration.

 

Los Angeles
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