Downtown Los Angeles office market reports
During the 1st quarter of this year, the Downtown Los Angeles office market experienced a notable increase in touring and transaction activity, as tenants that had previously held off their office leasing search due to the COVID-19 pandemic, returned to the market. As overall vacancy rates remain high, employers are now eager to capitalize on the generous concession packages and flexible terms that building landlords throughout DTLA are offering.
- The Los Angeles Metro area’s unemployment rate registered 5.4% as of February 2022, which is below the rate of 10.7% during the COVID-19 pandemic in January of 2021 and down from the pandemic’s peak of 19.2% in May 2020.
- Office occupying jobs have increased by 43,300 jobs since February 2021.
- Companies are returning to the office, but in a hybrid fashion, employees at many companies will onlybe coming into the office 2 or 3 days a week in the short run.
- As we enter into Q2 2022 we are beginning to see an increase in touring activity, which is an indication that the office market is improving.
- Leasing activity in Q1 2022 is up 1.5% when compared to Q1 of 2021.
- DTLA has seen a decrease of occupancy since the end of 2019 and has lost over 1.2 msf of occupancy over since then.
- Total office vacancy registered 26.4% at the end of the first quarter of 2022, up 2.3% from the quarter prior when DTLA reported a record high 25.8%.
- At the end of the first quarter, the office development pipeline totaled 827,100 sf across 6 properties.
- Office rents have remained relatively stable since the beginning of 2021 and averaged $46.32 psf full service per year at the end of Q1 2022.
- Concession packages have become more generous in recent months, the latest indication of tenant-favorable market conditions. Tenant improvement allowances for Class A space average just above $125 psf.
- Money is chasing core and core+ properties but sellers are not apt to sell because it is hard for them to recycle capital.
- 1 property traded hands in 1Q 2022 at an average sales price of $334.92 SF.
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