Downtown Los Angeles office market reports
- Return-to-work strategies are quickly becoming the norm as some of the largest employers announcing that employees are required to be in the office at least 4 days a week (e.g. JPMorgan and Disney).
- Touring and leasing activity have remained strong as companies are working to adjust their office space square footage requirements to accommodate everchanginghybrid work schedules.
- Vacancy in Greater DTLA’s 46 msf registered at 27.8% at the end of the fourth quarter, up 2.0% from the year prior.
- Within the approximate 30 msf Central Business District, vacancies registered at 25.7%, up 1.4% from the year prior.
- There were no new additions to buildings under construction in the 4th quarter. The 295k SF of current buildings under construction are located in the Arts District and Chinatown.
- Leasing activity finished the year strong, up nearly 28% when compared to 2021’s total, a sign that office demand is recovering.
- Although absorption levels have remained negative for the last 3 years, they have slightly improved from the negative 523k SF posted in 2021 to negative 405k SF by the end of 2022.
- Musick Peeler accounted for the largest lease at 333 South Hope Street in the quarter with 53k SF leased in Bunker Hill. The largest office lease for all of 2022 was Forever 21’s 162k SF lease at Cal Mart in the Fashion District.
Rental rate trends
- Office rental rates have decreased slightly, at $46.05 psf full services gross (as compared to $46.32 at year-end 2021).
- Concession packages have remained relatively constant year-over-year with average tenant improvement allowances of ~$127/RSF and free rent of 12 months on 10+ year deals for Class A & Trophy buildings.
- Due to higher interest rates and institutional investor/lender pessimism towards office as a product type, there were no completed sales transactions in the 4th quarter or – during all of- 2022.
- There are a number of institutional office properties that are current on the market to sell, including the recent additions of 707 Wilshire and PacMutual, in the 4th quarter.
Your source for the latest Los Angeles office market reports
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