first quarter 2016 los angeles county office market report first quarter 2016 market overview los...
TRANSCRIPT
Partnership. Performance.
FIRST QUARTER 2016
Los Angeles County Office Market Report
www.avisonyoung.com
New Jersey
Market Snapshot
Vacancy Rates Drop to 15.2%, while Lease Rates Climb Higher
Los Angeles County has recorded a decrease in the unemployment rate from 6.8% in March of 2015 to 5.0% in March of 2016. The improvement in the LA County economy was driven by the addition of 95,000 jobs, or a 2.2% annual increase in job growth for the year of 2015. The industries that led this job growth are health services, tourism and hospitality, government, and construction. The Los Angeles County office market recorded 537,092 square feet (sf) in positive net absorption, year-to-date, at the first quarter of the year. The positive demand has been moving vacancy rates down slowly, quarter-over-quarter, for the past two years. The LA County office market recorded a total vacancy of 15.2%. The vacancy rate in terms of submarkets ranged from a low of 11.5% in the West Los Angeles office market to a high of 20.5% in the Hollywood/Mid-Wilshire office market. The overall vacancy in LA County is expected to continue moving downward.
The markets that led demand for office space in the first quarter were Tri Cities (+226,549 sf), Downtown Los Angeles (+109,061 sf) and West Los Angeles (+100,316 sf). Demand for Class B office space well outpaced other asset classes, achieving 516,780 sf of positive net absorption. There is currently over two million square feet of office space under construction in the Los Angeles County office market, and Hollywood contains the largest share of this pipeline.
The weighted average asking lease rate increased to $2.92 per square foot (psf) on a full service gross basis (FSG). Since the beginning of 2015 the asking rate has increased by 7% in the LA County office market. Rental rates ranged from $4.22 psf in the West LA market to $2.13 psf in the San Gabriel Valley submarket. The largest leases in the first quarter were as follows: Netflix signed a prelease for an additional 123,221 SF at 5808 W Sunset, where they had already preleased 200,052 SF in the previous quarter. International Creative Management expanded within their current location at 10250 Constellation Blvd in West Los Angeles to a total of 108,259 SF. Vubiquity has leased 56,055 SF at 3900 W Alameda Ave in Burbank .
The significant sale transactions that closed in the first quarter were as follows: Douglas Emmett, Inc. and Qatar Investment acquired a portfolio of five buildings in Westwood at 10880 to 10980 Wilshire Blvd and 1100 Glendon Ave, for $777 psf. CBRE Global Investors purchased the Pasadena Towers at 800 E Colorado Blvd and 55 S Lake Ave in Pasadena for $537 psf. Lincoln Property Company and Rockwood Capital acquired 915 Wilshire Blvd in Downtown Los Angeles for $329 psf. Foreign capital continues to expand in the investment environment in LA County.
Asking Rent
Vacancy Rates
Net Absorption
Partnership. Performance.
FIRST QUARTER 2016
Market Overview
Los Angeles County Office Market Report
*The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
First Quarter 2016 | Los Angeles County Office Market Report
M A J O R L E A S E T R A N S A C T I O N S
M A J O R S A L E T R A N S A C T I O N S
SF Completion
Q2 2017356,100
6121 W. Sunset Blvd., Los Angeles
Korean Airlines
465,100
900 Wilshire Blvd., Los Angeles
Developer
Tishman Speyer
U N D E R C O N S T R U C T I O N
The industries driving the strongest demand for space in the Los Angeles office market are entertainment, media, and technology. Entertainment is the largest industry cluster in Los Angeles County
There are 1,857 office buildings in Los Angeles County. Of these, 627 are considered to be Class A office buildings. The market with the highest percentage of Class A square footage relative to its inventory is West Los Angeles
The average cap rate, year-to-date, in the Los Angeles County office market at the end of the first quarter of the year was 5.4%.
There are 2,070,696 square feet of office space under construction or renovation in the Los Angeles County office market. The submarket with the largest development pipeline is Hollywood.
Address
Q3 2016Kilroy Realty Corporation
Q4 2016493,400
*The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
700 S. Flower St, Los Angeles 700,000 Q1 2017The Ratkovich Company
12105 & 12126 W. Waterfront Dr., Los Angeles
L o s A n g e l e s M a r k e t s B y T h e N u m b e r s
First Quarter 2016 | Los Angeles County Office Market Report
*The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
First Quarter 2016 | Los Angeles County Office Market Report
* The information reported is based on data pertaining to office properties that are at least 20,000 sf and 2-stories or greater. Rental rates are estimated full service and have been calculated at the monthly rate.
Avison Young at a Glance
Contact Information - United States
213.935.7430 323.851.6666
www.avisonyoung.com
310.899.1800213.471.1069
Los Angeles - Downtown 555 S Flower St, Ste 3200Los Angeles, CA 90071 Primary Contact: Ted [email protected]
Los Angeles - North6711 Forest Lawn DrLos Angeles, CA 90068 Primary Contact: Mark Evanoff [email protected]
Los Angeles - West10940 Wilshire Blvd, Ste 2100 Los Angeles, CA 90024 Primary Contact: Jonathan Larsen [email protected]
Los Angeles - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy [email protected]
San Diego - La Jolla4225 Executive Sqr, Ste 600 La Jolla, CA 92037Primary Contact: Jerry [email protected]
858.201.7070
Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614Primary Contact: Stan Yoshihara [email protected]
949.757.1190
Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA 90071
© 2015, Avison Young (Canada) Inc. The statistics contained in this report were obtained from sources deemed reliable, including Avison Young, Bureau of Labor Statistics, CoStar Group Inc., Real Capital Analytics, Inc., Reis Services, LLC, State of CA Employment Development Department, U.S. Green Building Council. However, Avison Young (Canada) Inc. does not guarantee the accuracy or completeness of the information presented, nor does it assume any responsibility or liability for any errors or omissions. All opinions expressed and data provided herein are subject to change without notice. This report cannot be reproduced in part or in full in any format without the prior written consent of Avison Young (Canada) Inc.
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