Office Market
The Los Angeles County office market continued to post tightening vacancies and rising lease rates in the third quarter, driven by strong tenant demand.
The vacancy rate in L.A. County continued its steady decline with an annual decrease of 13.6% in the third quarter,from 13.1% in 2004 to 11.3% this year.
The West Los Angeles market posted the biggest annual change on a 22.6% decrease to 9.9%.
The San Fernando Valley posted the lowest third-quarter vacancy rate in the county at 7.7%, while the South Bay market posted the highest at 18.7%.
Quarterly average asking lease rates in Los Angeles County increased 5.1% to $2.23 per square foot, versus a year earlier. All Los Angeles County markets posted a gain in lease rates, with downtown L.A. recording the biggest gain, up 12.8% to $2.40 per square foot.
Net absorption in L.A. County remained positive in the third quarter at 121,520 square feet, though it’s down from the 1.9 million square feet of absorption recorded in the second quarter.
Third-quarter net absorption was greatest in the downtown L.A. market, which posted 258,172 square feet, followed by the South Bay market at 178,282 square feet.
The San Gabriel Valley was the net absorption laggard in the third quarter at negative 145,280 square feet.
Construction activity in the third quarter remained consistent, recording 1.6 million square feet for the second consecutive quarter.
Active construction in L.A. County included projects in the Tri-Cities, San Fernando Valley, San Gabriel Valley and West Los Angeles markets, in addition to several cities in Ventura County. West Los Angeles led the way with nearly 900,000 square feet under construction.
Industrial Market
The Los Angeles County industrial market continued to flourish in the third quarter.
The availability rate in Los Angeles County continued its steady decline to 5% in the period, versus 6.2% a year earlier. Commerce had the biggest annual change with a 43.6% decline to 4.2%.
The Mid-Counties market had the highest availability rate in the county at 6.5%.
Vacancy in Los Angeles County decreased in the third quarter to 1.8% from 1.9% the previous quarter. On an annual basis, vacancy has dropped 18.2% from last year when the rate was 2.2%.
Average asking lease rates in the county continued to inch upward, reaching 57 cents per square foot in the third quarter.
Gross activity continued to be strong in the quarter, with 11.6 million square feet of gross sales and leasing activity. The Mid-Counties market recorded the largest amount of activity with more than 3 million square feet in the period, up 34.1%.
Third-quarter construction activity increased to 8.8 million square feet, versus 8.4 million square feet in the second quarter.
Data and analysis provided by CB Richard Ellis Group Inc.’s Information Management Department.
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