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Avison Young releases Third Quarter 2023 Office Market Report for West Los Angeles
October 24, 2023
Los Angeles, Calif. –Avison Young has released its Third Quarter 2023 Office Market Report for West Los Angeles. The pandemic continues to have lingering effects on the West Los Angeles office market. Occupiers have been reassessing the impact of in-office versus hybrid work policies with many downsizing their office space utilization requirements.
Direct office vacancies in West Los Angeles registered at 18.3%, up 80 basis points from Q2 2023. Rental rates have remained flat or have decreased slightly for certain properties to attract new office tenants. Properties with plenty of amenities such as indoor/outdoor spaces, fitness centers, location to local establishments, all have been a primary focus for many occupiers as they try to attract employees back into the office.
“While many office tenants continue to navigate through numerous return to office strategies, the West LA market has experienced a steady increase in demand as tenants pursue a higher level of quality assets and amenities,” said Chris Cooper, Avison Young Principal and Managing Director – Southern California.
The West LA office market is faring better than many submarkets within Los Angeles. West LA leasing transaction volume picked up in the third quarter with over 1.2 million square feet (sf) leased, up 63% when compared to the prior quarter. Additionally, the number of deals when compared to the second quarter has increased by over 15%.
“There have been some large deals occurring within the West LA market. Clearlake Capital pre-leased 151,00 sf and Penske Media leased 113,000 sf in the third quarter,” said Erick Parulan, Senior Analyst - Market Intelligence with Avison Young. “As occupiers start slowly moving into their spaces within the next few quarters, we anticipate that absorption levels will bounce back.”
On the investment side, since the beginning of the year, there has been a total sales volume of $379 million in West LA with an average sale price of $426.93 per square foot.
“Owner-user buyers have pretty much dried up due to elevated interest rates, which is making it less compelling to purchase rather than to lease space. Most investors have taken a pencils down approach until interest rates stabilize,” added Mitch Stokes, a Principal in the firm’s West Los Angeles office. “There is a lot of existing debt in the market with low interest rates that has yet to mature. I think we will see an increase in distressed sales throughout 2024.”
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