Real Estate Watch: Los Angeles County
Los Angeles Office Lease, Vacancies Rise
Office
The Los Angeles County office market held several trends through the first quarter: vacancy rates continued to climb, if only by a hair, lease rates continued to rise, up an average three cents per square foot, and construction activity continued to decline.
Net absorption was the exception.
The county recorded 436,013 square feet of positive net absorption in the first quarter, vs. 473,913 square feet of negative net absorption in the fourth quarter.
Six of the seven Los Angeles County submarkets saw improved net absorption, with just two of the markets,downtown Los Angeles and the South Bay,closing the quarter with negative net absorption.
The vacancy rate in Los Angeles County increased 7.7% to 14.5%, vs. a year earlier. Four markets reported a continued steady decline in vacancy rates: Tri-Cities/Glendale, Hollywood/Wilshire Corridor, San Fernando Valley and San Gabriel Valley.
The biggest decrease was in the San Fernando Valley, which saw a 10.8% decline in vacancy. Downtown Los Angeles reported the biggest annual change with a 27.6% increase.
As vacancy rates continued to inch higher, average asking lease rates crept lower.
The average asking lease rate in the county fell 4.8% to $2.09 per square foot, vs. a year earlier. San Gabriel Valley was the sole gainer, up 2.2% year-over-year to $1.84 per square foot.
Tri-Cities/Glendale rates remained flat at $2.26 per square foot. The remaining five regions reported lower average asking lease rates, vs. a year ago.
Construction activity in Los Angeles County has whittled down over the course of the year, falling to 1.4 million square feet from 2.4 million square feet a year earlier.
Industrial
During the first quarter, 1.5 million square feet of industrial space broke ground in Los Angeles County.
The availability rate continued to decline while the county vacancy rate was stable. Gross activity ticked down for the second consecutive quarter, following a spike in the third quarter last year.
Six of seven Los Angeles County submarkets reported increased construction activity in the quarter.
Construction activity grew 31% to 6.4 million square feet. It was the first uptick in construction activity in the county in a year.
The availability rate in Los Angeles County fell 10.2% to 6.6%, vs. a year earlier. The San Fernando Valley saw a 19% change increase in availability to 8.1%, vs. a year earlier.
The vacancy rate remained stable at 2.8% for a third consecutive quarter.
Slight decreases in vacancy were reported in Tri-Cities/Glendale, Los Angeles and San Gabriel Valley, with small increases in Commerce, Vernon, Mid-Counties, San Fernando Valley and South Bay.
Gross activity in Los Angeles County was 11 million square feet in the quarter, an increase of 12% vs. a year earlier.
Data & Analysis provided by CB Richard Ellis’ Global Research & Consulting.
