Dr. Gleb Tsipursky – The Office Whisperer
Nirit Cohen – WorkFutures
Angela Howard – Culture Expert
Drew Jones – Design & Innovation
Jonathan Price – CRE & Flex Expert
A report from Marcus & Millichap has found that office vacancy in Los Angeles will grow 160 basis points this year to 18.5%, indicating a slow recovery for the market.
Despite the increase in vacancy and falling rents, Los Angeles’ vaccination efforts have been very successful and restrictions could be lifted across the city very soon. This means that the office sector can finally start down its path of rebounding.
Still, expansion plans have been paused and many tenants have already cut down on their real estate footprint. Although first quarter leasing improved from the previous quarter, lease deals favored smaller spaces.
The report also found that new construction is putting downward pressure on the office market, with 4.2 million square feet of office space expected to be completed this year. Because of increased availability and subleases, signing leases for these new spaces may be difficult.
However, the South Bay saw its vacancy rate fall with 311,000 square feet of absorption. Beyond Meat took out a 280,000 lease in El Segundo, while L’Oreal absorbed the last 70,000 square feet at the same property.
Overall, while leasing activity will definitely be slow to return to pre-pandemic levels, investment already has. Each specific market, particularly in larger cities like Los Angeles, are seeing delayed recovery, but the overall national market is improving.
