A new market report from Savills found that Los Angeles’ office leasing market hit its lowest point in 20 years.
The report found that office leasing totaled around 10 million square feet last year, a 44% decrease from 2019.
The pandemic undoubtedly was the cause of this fall, as millions of people were forced to work from home and businesses closed.
This drop in leasing activity caused vacancy rates to reach 22.5%, a 10-year high, compared to 2019’s 18.1%.
An increase of sublease space also played a role in the growing availability rate, which grew to 8 million square feet.
However, rents have still grown by 6.7% year-over-year this year. Still, Savills says this is largely due to new construction deliveries and expects rents to decline due to the increased office space availability.
Los Angeles became the epicenter of the COVID-19 pandemic at the end of 2020, which is expected to continue hurting the city’s office leasings. That is why Savills anticipates that leasing activity to be strained for at least the first half of 2021.
However, as the vaccine has become available and studio production deemed an essential industry, the city’s economy could start to slowly rebound.