Los Angeles office market report
Q2 2024
Landlords in Los Angeles face critical decisions with over $9 billion in CMBS debt maturing soon, likely sparking increased investment activity. As they weigh refinancing versus property sales, this pivotal juncture reflects broader strategic considerations beyond finances. The evolving landscape is poised to impact market dynamics, influencing transaction volumes and investment trends. Despite challenges, the second quarter showed signs of office market recovery, with slight improvements in net absorption and rental rates. Landlords are enhancing incentive packages to attract tenants amid competitive pressures, reflecting adaptive strategies to meet evolving economic conditions and tenant preferences. Transaction volumes in downtown LA dipped in the second quarter, indicating measured adjustments in leasing amid shifting market factors.
Construction inventory
There is currently 2.1 MSF of office product under construction. In total, there is 286 MSF of office product in the Los Angeles market.
Net absorption
Net absorption remained in the red with 85,000 SF of negative net absorption in Q2 2024.
Direct asking rent
Average asking lease rates increased very slightly in Q2 2024 to $44.14/SF. Average asking lease rates have increased by 50 cents quarter over quarter.
Availabilities
Total available direct space decreased slightly to 57.9 MSF and sublet space dropped to 8.2 MSF in the second quarter.
Investment sales
Investment sales in the Los Angeles office market reported a sales volume of over $281 million and an average sales price of $356/SF for the second quarter of 2024.
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