Downtown Los Angeles office market report
Q2 2024
Office rental rates rose in Q2 2024 to $47.91 per square foot, up from $46.00 in Q2 2023, partly due to increased operating expenses such as utilities, maintenance, and inflation. Meanwhile, tenant improvement allowances in Downtown Los Angeles held steady at $120 per square foot for 10-year leases, with tenants negotiating longer leases benefiting from 12 months of rent abatement. The Downtown LA market closed Q2 2024 with a 30.5% vacancy rate, down 40 basis points from the previous quarter, notably 27.8% in the Central Business District for Trophy and Class A properties. The area's dynamic commercial real estate landscape sees stakeholders adapting strategies to balance leasing incentives and long-term investment viability amidst shifting tenant preferences and economic conditions. Leasing activity surged in Q2 2024 to over 432,000 square feet, driven by strong tenant demand and over 60 tenants seeking approximately 1.6 million square feet of space, indicating a promising outlook for Downtown LA's leasing market.
Construction inventory
There is currently 137,000 SF of office product under construction. In total, there is 47 MSF of office product in the Downtown Los Angeles market.
Net absorption
Net absorption remained in the red with 272,456 SF of negative net absorption in Q2 2024 for Class A and Trophy Properties.
Asking rent
Average asking lease rates increased very slightly in Q2 2024 to $47.91/SF. Average asking lease rates have increased by 40 cents quarter over quarter.
Leasing activity
Leasing Activity for the quarter totaled to 432,000 SF leased. Bringing the YTD total to over 700,000 SF for 2024.
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