Market dynamics in Downtown Los Angeles: Rising office vacancies, price adjustments, and adaptive reuse strategies

• DTLA’s office vacancy rate has risen significantly from 15.3% in Q1 2020 to a historic high of 22.0% in Q2 2025, while the average market sale price has fallen 27.1% from $325 per square foot to $237 per square foot over the same period. This trend reflects a structural market shift by remote work adoption, tenant downsizing and an oversupply of space.
• The market’s rapid devaluation is exemplified by 1000 Wilshire, a former trophy asset whose value plunged 69% to $60.5M. Its landlord defaulted on its loan after a major tenant vacated, illustrating how high vacancies and borrowing costs are creating a wave of distress that depresses value across the entire market.
• To counter the crisis, a strategy is proposed to convert empty offices to residential units. A study found 10 buildings could yield ~3,859 homes, potentially adding $12B in property value. This approach builds on the successful 1999 Adaptive Reuse Ordinance but requires new financial incentives to be viable.

Los Angeles
Ka Lok Marco Chung