{"id":1004681603,"date":"2023-09-21T08:08:43","date_gmt":"2023-09-21T16:08:43","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004681603"},"modified":"2023-09-22T06:12:16","modified_gmt":"2023-09-22T14:12:16","slug":"los-angeles-office-market-still-struggles","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/","title":{"rendered":"Los Angeles Office Market Still Struggles"},"content":{"rendered":"
\"Union<\/a>

The $104 million sale of Union Bank Plaza in March remained the largest transaction through July. Image courtesy of KBS<\/em><\/p><\/div>\n

The office market’s weak performance is still ongoing, as owners and developers are experimenting with solutions for the sector\u2019s future. Through the first seven months of the year, Los Angeles\u2019 office market experienced a similar trend, according to recent data from CommercialEdge<\/a>.<\/p>\n

Office development activity cooled off, as did investments and listing rates. A few new projects came online year-to-date through July, with the largest falling in the creative office segment.<\/p>\n

As of July, Los Angeles had 1.1 million square feet of rentable office space under construction<\/a>. The metro\u2019s development pipeline represented 0.4 percent of its total stock, down 50 basis points since March and 120 basis points below the national rate.<\/p>\n

Compared to other gateway markets, Los Angeles stood at the bottom of the list in terms of office development. San Francisco led the ranking, with 3.8 percent of stock underway, followed by Miami (2.9 percent), Manhattan (1.6 percent) and Chicago (0.8 percent).<\/p>\n

No new construction starts since April<\/h2>\n

Four properties broke ground year-to-date through July, comprising a total of 472,827 square feet, marking a 20.6 percent decrease year-over-year. Furthermore, no new construction starts were recorded since April.<\/p>\n

Excluding owner-occupied assets, the largest development to commence construction was The Bradmore Group\u2019s<\/strong> 42XX project in Marina Del Ray. The developer financed the 151,000-square-foot project last year with a $117 million construction loan<\/a>, which encompassed senior debt from Bank OZK <\/strong>and mezzanine debt from Acore Capital<\/strong>.<\/p>\n

Other developments that broke ground included Swift Real Estate Partners<\/strong>\u2019 146,000-square-foot office addition to the Reframe Studios redevelopment in Glendale, Continental Development Corp.<\/strong>\u2019s 136,438-square-foot building for Raytheon in El Segundo, as well as Redcar Properties\u2019<\/strong><\/a> Euclid 1650, measuring 39,389 square feet and taking shape in Santa Monica.<\/p>\n

Completions were also on a downward trend\u2014a total of 1.4 million square feet of office space came online in the market during the first seven months of the year, down 38.7 percent year-over-year.<\/p>\n

\"Second<\/a>

Worthe Real Estate completed the Second Century Project for Warner Bros., in Burbank. Rendering by Sora, courtesy of Gehry Partners<\/em><\/p><\/div>\n

The largest of these was the 800,000-square-foot, two-building Second Century Project<\/a>, developed by Worthe Real Estate <\/strong>for Warner Bros. <\/strong>in Burbank.<\/p>\n

In terms of rentable office space, two completions stood out\u2014Samitaur Constructs\u2019<\/strong> 180,548-square-foot (W)rapper Tower in Culver City, along with The Luzzatto Co.<\/strong>\u2019s 107,199-square-foot The Depot, in South Los Angeles. Both properties are marketed as creative office propeties.<\/p>\n

Leasing grinds to a halt<\/h2>\n

Although vacancy in Los Angeles\u2019 office market remained elevated\u2014at 14.1 percent in July\u2014the metro\u2019s rate was 300 basis points below the national average. L.A. fared better than most of its gateway counterparts. San Francisco\u2019s rate stood at 21.7 percent, followed by Chicago (19.4 percent), Manhattan (17.4 percent) and Miami (12.8 percent).<\/p>\n

Office leases were scarce, with tenants either downsizing space or relocating to more favorable locations.<\/p>\n

In April, publisher and global media company Cond\u00e9 Nast <\/strong>relocated to a 25,000-square-foot space<\/a> in the 1.4 million-square-foot ROW DTLA, within the Arts District submarket. JLL<\/strong> brokered the transaction on behalf of both parties.<\/p>\n

\"5250<\/a>

DivcoWest acquired 5250 Lankershim Blvd. for $92 million in 2021. Image courtesy of CommercialEdge<\/em><\/p><\/div>\n

In May, Syracuse University signed a lease<\/a> for 21,377 square feet at 5250 Lankershim Blvd. in North Hollywood. DivcoWest<\/strong> is the owner of the 179,246-square-foot office building, having acquired it in 2021 for $92 million.<\/p>\n

Investments slowed in the third quarter<\/h2>\n

Roughly 5.6 million square feet of office space traded in Los Angeles year-to-date through July, for a total of $1.2 billion. Investment volume dropped to less than half of the $2.7 billion recorded during the same period last year\u2014when more than 6 million square feet traded.<\/p>\n

Of the total amount, 4.3 million square feet changed hands in the first quarter alone, for $827 million. Investments cooled gradually after the first three months, with the top five largest sales all occurring in March. Despite the depressed transaction volume, Los Angeles still ranked third on a national level, on par with Boston ($1.2 billion) and behind Manhattan ($1.5 billion).<\/p>\n

Year-to-date through July, Los Angeles office assets traded at an average of $231 per square foot, which was 17.9 percent above the national figure.<\/p>\n

Among the few transactions recorded after the first quarter was the $24.7 million sale<\/a> of the DYAD South Bay Campus. Borstein Enterprises <\/strong>purchased the 116,220-square-foot campus from Westport Capital Partners LLC<\/strong>.<\/p>\n

In June, UCLA<\/strong> acquired an iconic office building in downtown L.A. Lionstone Investments <\/strong>sold the 351,189-square-foot Trust Building for $40 million, or $113.9 per square foot.<\/p>\n

The largest sale though the first seven months of the year remained Waterbridge Capital<\/strong>\u2019s $104 million acquisition of Union Bank Plaza<\/a>, also in downtown Los Angeles. KBS<\/strong> sold the asset through its KBS Real Estate Investment Trust II.<\/p>\n

More coworking spaces open<\/h2>\n
\"2121<\/a>

Premier Workspaces’ new location at 2121 Avenue of the Stars encompasses 55 private offices. Image courtesy of CommercialEdge<\/em><\/p><\/div>\n

As of July, 2.2 percent of Los Angeles\u2019 entire office inventory was coworking space\u2014roughly 4.7 million square feet. Compared to other gateway markets, the metro’s flex office inventory relative to total office space stood below that of Manhattan (2.9 percent) and Miami (3.3 percent), but above San Francisco (1.9 percent) and Chicago (1.9 percent).<\/p>\n

In April, Premier Workspaces <\/a><\/strong>opened a new location<\/a> within the Century City submarket, at 2121 Avenue of the Stars. The company signed a lease for 14,500 square feet at The<\/strong> Irvine Co.<\/strong>\u2019s 970,000-square-foot property. The new location offers 55 private offices, ranging from 90 to 240 square feet.<\/p>\n","protected":false},"excerpt":{"rendered":"

Read the latest update based on CommercialEdge data.<\/p>\n","protected":false},"author":1284,"featured_media":1004655399,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21784,21782,21783,1594,21747,15],"tags":[51047,50674],"class_list":["post-1004681603","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-brokerage","category-development","category-investment","category-los-angeles","category-office","category-west","tag-marketupdate","tag-commercialedge"],"acf":[],"yoast_head":"\nLos Angeles Office Market Still Struggles - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Los Angeles' office market continued on a sluggish note year-to-date through July, according to the latest CommercialEdge data.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Los Angeles Office Market Still Struggles\" \/>\n<meta property=\"og:description\" content=\"Los Angeles' office market continued on a sluggish note year-to-date through July, according to the latest CommercialEdge data.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2023-09-21T16:08:43+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-09-22T14:12:16+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/04\/Union-Bank-Plaza-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1152\" \/>\n\t<meta property=\"og:image:height\" content=\"864\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Tudor Scolca\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/\",\"name\":\"Los Angeles Office Market Still Struggles - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/04\/Union-Bank-Plaza-1.jpg\",\"datePublished\":\"2023-09-21T16:08:43+00:00\",\"dateModified\":\"2023-09-22T14:12:16+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/daae3daa7b99fdfb75a85cb3cd92a26d\"},\"description\":\"Los Angeles' office market continued on a sluggish note year-to-date through July, according to the latest CommercialEdge data.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/los-angeles-office-market-still-struggles\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/04\/Union-Bank-Plaza-1.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/04\/Union-Bank-Plaza-1.jpg\",\"width\":1152,\"height\":864,\"caption\":\"The $104 million sale of Union Bank Plaza in March remained the largest transaction through July. 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