second quarter 2015 los angeles county office ......santa clarita valley 2,304,500 14.3% 14.6%...
TRANSCRIPT
Partnership. Performance.
SECOND QUARTER 2015
Los Angeles County Office Market Report
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Market SnapshotDemand For Space Causes The Vacancy Rate To Fall In Spite Of An Increase In Supply
Los Angeles County has recorded a decrease in the unemployment rate from 8.2% in June 2014 to 7.4% in June 2015. The improvement in the LA County economy was driven by the addition of 106,500 jobs or a 2.5% increase in job growth between June 2014 and June 2015. The industries that led this job growth are educational and health service (+31,100 jobs) and trade, transportation and utilities (+19,600 jobs). The industry with the largest job losses was manufacturing with a loss of 3,500 jobs.
The LA County office market recorded positive absorption of 897,500 square feet (sf) in Q2 and a year-to-date positive absorption of 974,100 sf. The West Los Angeles office market recorded the most demand for office space mid-way through 2015. The total vacancy rate decreased to 16.1% in Q2 compared to 16.4% in Q1. In Q2, the vacancy rate in LA County ranged from 12.1% in West Los Angeles to 20.3% in South Bay. There has been a strong drop in the vacancy rate in both Class A and Class B buildings; however, Class B buildings have performed the best in 2015.
The weighted average asking lease rate increased to $2.79 per square foot (psf) on a full service gross basis (FSG). The tenants in LA County are expected to continue to face an increasing rental rate market. Rental rates ranged from $4.04 psf in the West LA market to $2.05 psf in the San Gabriel Valley submarket.
New leasing activity in Q2 was 3,850,000 sf compared to 3,001,900 sf in Q1, an increase of 28%. The building class that recorded the most amount of leasing activity was Class A, accounting for 63% of all new leasing activity. The largest leases in Q2 were as follows: Lewis Brisbois Bisgaard & Smith LLP renewed for 215,200 sf in Downtown LA, DaVita Healthcare Partners leased 184,000 sf in South Bay and AECOM leased 112,500 sf in Downtown LA.
Investors illustrated a strong interest in LA County in Q2. The largest transaction occurred in the West Los Angeles market. Invesco acquired 2600-2800 Colorado Ave from Centurion Real Estate Partners for $284,000,000 or $899 psf, The Swig Company acquired 6300 Wilshire Blvd from Legacy Partners for $151,000,000 or $370 psf and Lincoln Property Company acquired 303 N. Glenoaks Blvd from Kennedy Wilson for $84,175,000 or $258 psf.
Asking Rent
Vacancy RatesI
Net Absorption
Partnership. Performance.
SECOND QUARTER 2015
Market Overview
Los Angeles County Office Market Report
The job growth in LA County has amplified the space needs of tenants. The delivery of 601,800 sf of office space in Q2 is not expected to burden the market. An illustration of the strong demand for space is that the 601,800 sf of delivered space is 67% leased. The total vacancy rate in the LA County office market is on track to fall below 16% in the second half of 2015.
*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.
Second Quarter 2015 | 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
SF Buyer
Invesco Real Estate
PriceSeller
Centurion Real Estate Partners 315,900
6300 Wilshire Blvd., Los Angeles Legacy Partners $151,000,000
Kennedy Wilson
21250 Hawthorne Blvd., Torrance Stream Realty Partners
21515 Hawthorne Blvd., Torrance The Muller Company Jamison Services
M A J O R S A L E T R A N S A C T I O N S
SF Completion
Q4 2016323,300
900 Wilshire Blvd., Los Angeles
Hudson Pacific Properties
356,100
5808 W. Sunset Blvd., Los Angeles
Developer
Kilroy Realty Corporation
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 1,851 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
There was a total of $2.8 billion of sales volume in the first half of 2015. The average sales per square foot in the Los Angeles County office market was $324 psf.
There are 2,970,600 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.
Type SF
Renewal
Market
Downtown Los Angeles
DaVita Healthcare Partners New South Bay 184,000
AECOM New 300 S. Grand Ave., Los Angeles Downtown Los Angeles
Disney Renewal 2411 W. Olive Ave., Burbank Tri-Cities 111,000
Sage Publications 100,400
Tenant
Lewis Brisbois Bisgaard & Smith LLP
Address
633 W. 5th St., Los Angeles
2120/2175 E Park Place, El Segundo
215,200
$284,000,000
Address
2600 Colorado Ave., Santa Monica
Bixby Land Company
408,100
$62,500,000
$84,175,000
$68,500,000
367,000
302,600
The Swig Company
Address
6121 W. Sunset Blvd., Hollywood
Q2 2017Korean Airlines
Q4 2015472,500
303 N. Glenoaks Blvd., Burbank 326,500
LA North
PSF
$899
$370
$258
$226
$170
Lincoln Property Company
*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.
112,500
New 2400 Conejo Spectrum Dr., Thousand Oaks
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
Second Quarter 2015 | 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.
Second Quarter 2015 | Los Angeles County Office Market Report
Office Markets
Century City 10,845,200 11.2% 11.3% 66,600 $4.45Santa Monica 9,471,200 8.6% 9.7% -179,600 $4.83Beverly Hills 6,953,700 7.3% 7.6% 116,100 $4.79Miracle Mile 5,383,800 12.3% 12.4% 57,600 $3.51Westwood 4,867,600 13.4% 13.9% -7,800 $3.91Culver City 4,042,600 13.8% 14.5% 1,300 $2.71Marina Del Rey/Playa Vista 6,272,400 15.9% 18.6% 135,800 $3.56Brentwood 3,318,200 10.0% 10.2% 113,100 $3.60Olympic Corridor 3,345,400 5.1% 5.5% 303,900 $3.29West Hollywood 2,980,800 20.6% 20.9% 52,400 $4.38West Los Angeles 869,900 14.2% 14.2% -9,300 $2.73West Los Angeles Market Total 58,350,800 11.4% 12.1% 650,100 $4.04
Existing Inventory
Direct Vacancy
%
Total Vacancy
%
YTD Net Absorption
Average Asking Rents
Financial District 19,139,900 17.1% 18.0% 43,700 $3.02Bunker Hill 8,122,100 22.2% 22.2% 102,000 $3.15South Park 3,525,500 12.8% 13.3% -3,700 $2.76Greater Downtown 2,652,600 16.0% 16.6% -19,700 $2.39Downtown Los Angeles Market Total 33,440,100 18.1% 18.4% 122,300 $3.05
Existing Inventory
Direct Vacancy
%
Total Vacancy
%
YTD Net Absorption
Average Asking Rents
El Segundo/Beach Cities 11,473,800 15.1% 16.3% 38,500 $2.68Downtown Long Beach 5,138,700 20.4% 20.4% 31,200 $2.26Suburban Long Beach 4,523,100 16.0% 16.3% 30,600 $1.93Torrance 4,445,000 13.3% 14.1% -12,800 $2.22LAX 4,417,800 39.1% 39.1% -6,800 $1.57190th Street Corridor 3,485,700 22.2% 22.4% 30,200 $1.86South Bay Market Total 33,484,100 19.7% 20.3% 110,900 $2.10
Existing Inventory
Direct Vacancy
%
Total Vacancy
%
YTD Net Absorption
Average Asking Rents
West San Fernando Valley 15,507,900 15.5% 16.1% 151,000 $2.24Conejo Valley 6,736,400 15.3% 15.6% 132,900 $2.20Central San Fernando Valley 4,805,800 9.8% 10.8% -70,600 $2.47East San Fernando Valley 2,321,500 16.4% 16.6% 19,900 $2.38Santa Clarita Valley 2,304,500 14.3% 14.6% -4,800 $2.37LA North Market Total 31,676,100 14.5% 15.1% 228,400 $2.27
Existing Inventory
Direct Vacancy
%
Total Vacancy
%
YTD Net Absorption
Average Asking Rents
Pasadena 8,448,200 17.5% 17.6% -192,800 $2.89Burbank 6,869,000 13.8% 16.0% 30,400 $3.15Glendale 6,338,100 15.4% 15.6% 79,200 $2.48Monrovia 1,178,800 19.1% 20.8% 29,600 $2.83Arcadia 622,700 6.5% 6.5% 11,300 $2.03Tri Cities Market Total 23,456,800 15.6% 16.5% -42,300 $2.82
Existing Inventory
Direct Vacancy
%
Total Vacancy
%
YTD Net Absorption
Average Asking Rents
Mid Wilshire 10,517,800 21.0% 21.1% 28,400 $1.83Hollywood 3,262,300 11.3% 11.6% 8,300 $3.56Hollywood/Mid-Wilshire Market Total 13,780,100 18.7% 18.8% 36,700 $2.12
Existing Inventory
Direct Vacancy
%
Total Vacancy
%
YTD Net Absorption
Average Asking Rents
East San Gabriel Valley 6,775,500 15.5% 15.5% -111,800 $2.03West San Gabriel Valley 3,537,400 17.4% 17.4% -20,200 $2.08San Gabriel Valley Market Total 10,312,900 16.2% 16.2% -132,000 $2.05
Los Angeles County Total 204,500,900 15.6% 16.1% 974,100 $2.79
Direct Vacancy
%
Existing Inventory
Total Vacancy
%
YTD Net Absorption
Average Asking Rents
*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
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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]
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Report Prepared By:Nash Midzi - Research Manager 555 S Flower St, Ste 3200Los Angeles, CA 90071
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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