Los Angeles Vacancy Improved During the Last Year

Los Angeles continued to see sluggish levels of office leasing activity in February, but there are signs that the pace might accelerate in the coming months. Office vacancy across the metro was 13.3 percent as of February, down 20 basis points month-over-month and 50 basis points year-over-year, CommercialEdge data shows.

Los Angeles maintained a better position relative to both national rates and other gateway cities. National office vacancy was 15.7 percent as of February, up 70 basis points year-over-year. Los Angeles fared better than Chicago (20.3 percent vacancy) and San Francisco (16.8 percent), but lagged Manhattan’s rate (13.1).

The after-effects of the pandemic have accelerated the flight-to-quality phenomenon in many major metros, Los Angeles included. And as major new projects are being delivered to the urban submarkets, there are signs that the situation will improve. For example, office vacancy in the metro’s CBD was down 80 basis points month-over-month, to 13.1 percent in February. Similar improvements were recorded in the Wilshire Corridor (down 20 basis points, to 7.1 percent), Santa Monica (down 30 basis points, to 15.0 percent) and San Gabriel Valley (down 40 basis points, to 10.3 percent), among a few other submarkets.

Despite low levels of activity, the metro’s listing rates continued to climb, as more Class A product is being constructed. The average full-service equivalent listing rate was $41.62 as of February, 8.1 percent higher year-over-year. Los Angeles had the fastest growing listing rates in the nation, with the national rate growing by just 1.2 percent year-over-year.

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