During the first quarter of 2021, Los Angeles saw its highest vacancy rate since the beginning of the pandemic, according to a recent report from CBRE.
Although vaccinations are being widely distributed and the city is seeing a slight rollback of pandemic-related restrictions, it could be years before the market fully recovers.
CBRE’s MarketView report found that, despite increased touring activity, the increase of remote working could delay the office market’s recovery process.
“We believe that office will never be quite what it was prior to the pandemic,” said Bob Sulentic, President and CEO at CBRE in the company’s first-quarter earnings call on Thursday. “We also believe it will be very different than it is today…There will certainly be a hybrid scenario where there’ll be some work from home, some work from flex space and then, of course, some work from offices.”
The report revealed that net absorption grew in the quarter with negative 1.8 million square feet, partly due to Technicolor moving out of 160,000 square feet at Hollywood Media Center, HBO abandoning 115,000 square feet at Colorado Center and American Honda Finance Corp. vacating over 100,000 square feet on Madrona Avenue.
New leases accounted for 1.4 million square feet, and over half of total square footage signed during the first quarter came from lease renewals and extensions.
CBRE is predicting that the Los Angeles office market could begin recovery by 2023, which is 13 quarters from the beginning of the pandemic.