Los Angeles remained an outlier in the U.S. office recovery during the second quarter, with vacancy rising to 25.8% even as more than half of major office markets recorded improving occupancy, according to CBRE.
The increase was driven by continued weakness in Downtown Los Angeles and the Hollywood/Wilshire Corridor, where vacancy reached 35.3% and 28%, respectively. Meanwhile, Century City and the broader Westside continued to outperform, supported by steady demand from financial and legal tenants.
Creative Industries Slow the Recovery
CBRE attributes LA’s slower recovery in part to its concentration of entertainment, technology, and media companies, sectors that have been slower to bring employees back to the office than industries such as banking and law.
That contrast has created a split market, with creative-focused submarkets continuing to struggle while office buildings serving financial and professional services tenants have seen stronger leasing activity.
Century City Leads Leasing Activity
The Westside accounted for 38.4% of regional leasing activity during the quarter, helped by several major deals in Century City. Among them was PwC’s 138,000-square-foot lease at 2121 Avenue of the Stars, one of the region’s largest office leases in the quarter.
Century City’s vacancy stood at 23%, below the regional average.
Demand Remains Under Pressure
Despite leasing activity, overall office demand remained weak. Los Angeles recorded 432,000 square feet of negative absorption in the second quarter and nearly 3 million square feet of negative absorption over the past 12 months.
The largest occupancy declines occurred in the South Bay, Hollywood/Wilshire Corridor, and Downtown Los Angeles.
Total leasing volume reached 4.5 million square feet in the second quarter. While that represented a 12.4% decline from the first quarter, it remained above the 3.8 million square feet leased during the same period in 2025.
Financial Hubs Continue to Recover Faster
Markets with larger concentrations of financial services and legal firms have generally recovered more quickly as many employers in those industries have expanded in-office requirements. That has helped cities such as New York strengthen office demand, while Los Angeles continues to face a slower recovery tied to its creative-sector workforce.
