Office Market
The Los Angeles County office market recorded a lower vacancy rate in the second quarter, versus the prior quarter, while asking lease rates, net absorption and construction activity increased.
The vacancy rate in L.A. County posted an annual decline of 15.5% to 9.5% during the second quarter. West Los Angeles had the biggest annual change with a 26% decline to 6.9% in the period.
The San Gabriel Valley posted the lowest vacancy rate in L.A. County at 4.8%, while the South Bay market recorded the highest at 15.9%.
Average asking lease rates in L.A. County increased 14 cents to $2.32 cents per square foot in the second quarter from a year ago.
All L.A. County markets had an increase in rates, versus a year ago. The greatest annual increase was in the Hollywood/Wilshire Corridor market, up 19.5% to $2.14 per square foot. South Bay had the slimmest increase in asking rates, up 1.8% to $1.87 per square foot.
Net absorption in L.A. County continued to be positive in the second quarter, with 1.1 million square feet of net absorption in the period. Second-quarter net absorption was highest in the Hollywood/Wilshire Corridor market at 294,630 square feet, followed by downtown L.A. with 280,790 square feet and West L.A. with 270,260 square feet. All L.A. County markets saw positive net absorption in the second quarter.
Construction activity was 1.1 million square feet in the second quarter, down from 1.6 million square feet a year ago.
Industrial Market
L.A. County’s industrial market saw a decline in vacancy and availability in the second quarter, with average asking rates rising.
Vacancy fell to 1.4% in the second quarter, versus 1.9% a year earlier.
Average asking lease rates in L.A. County decreased to 61 cents per square foot in the period, following five consecutive quarters of steadily increasing asking rates. Asking rates were highest in western San Fernando Valley at 75 cents per square foot and lowest in Vernon at 44 cents per square foot.
The availability rate in L.A. County fell to 4.9% from 5.3% a year ago. The Mid-Counties market posted the biggest annual change, down 30% to 5%, followed closely by the Vernon market with a 29.3% annual decrease to 3.5% in the quarter.
The greater San Fernando Valley market had the highest availability rate in L.A. County at 6.3%, while the Los Angeles and Vernon markets offered the lowest at 3.5%.
Gross activity was 10.2 million square feet in the quarter, down 29% a year earlier. All L.A. County markets had a decrease in gross activity in the period.
The biggest decline in sales and leasing activity was in the L.A. market, which fell 60% to 503,718 square feet in the second quarter.
The Vernon and Commerce markets were next with 50% and 43% annual decreases, respectively.
Construction activity was 6.1 million square feet in the second quarter, down from 8.4 million square feet a year ago.
Data and analysis provided by CB Richard Ellis Group Inc.’s research department.
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