After witnessing increases since 2014, net tenant concession packages have flattened in downtown Los Angeles
Increase in tenant allowances PSF dating back to 2014
In Downtown Los Angeles, landlords provided unprecedented concession packages to tenants as a strategy to encounter long-term new leases and renewals for property stabilization.
Prior to Covid-19, between 2014 and 2019, the average tenant allowance per square foot for office properties was $71 psf. However, from 2021 to 2023, the average tenant allowance PSF value rose to $122.60, marking a substantial increase of 73% against the average figure from 2014-2019. The increase can be attributed to the steep rise in construction costs and raw materials over the last several years.
Looking forward, a regression of this trend is likely, and has slowly started due to capital constraints imposed by lenders and flattening of current and forecasted construction costs.
February 8, 2024
