third quarter 2016 / office market report los angeles€¦ · los angeles third quarter 2016 /...
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14.9%Total vacancy rate
$2.99 PSFWeighted average asking
rental rate
The Los Angeles County unemployment rate was recorded at 5.3% in August 2016, down from 6.7% in August 2015. The improvement in the Los Angeles County economy this quarter was driven mainly by job growth in the service sector. The leading industries in job growth for the office-using sector were business services and professional services, which continue to steadily improve with an increase of 3.4% year-over-year.
The Los Angeles County office market had a strong finish at mid-year 2016, seeing an increase in leasing activity by office occupants in the business services, media, technology, and finance sectors. Second quarter finished with 564,200 sf of positive net absorption. Third quarter 2016 saw weaker activity, although office employment and tenant demand have
been steady. Positive net absorption of 454,300 sf was recorded for this quarter, down 109,900 sf from last quarter. As a result, the vacancy rate decreased just slightly from 15% last quarter to 14.9% this quarter.
Average asking rents continued to move upward as there has been anticipated increases in office demand. The weighted average asking lease rate on a full service gross basis for the Los Angeles market was $2.99 per square foot (psf ), a $0.05 increase from the average last quarter. Third quarter’s average lease rates ranged from high water marks of $4.44 psf in West Los Angeles to $2.23 psf on the lower end in the San Gabriel Valley submarket. The West Los Angeles market remains one of the stronger and still popular regions with the lowest vacancy rates of the Los Angeles market.
Market Overview
Third Quarter 2016 / Office Market Report
Los Angeles
Market Facts
5.3%Los Angeles County unemployment rate
454,300 SFPositive net absorption
Photo by Mott Smith
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Los Angeles Third Quarter 2016 / Office Market Report
Market By The Numbers
SubmarketExisting Inventory (SF)
Q3 2016 Vacancy %
Q2 2016 Vacancy %
Q3 2016 Net Absorption (SF)
YTD Net Absorption (SF)
Q3 2016 Completions (SF)
Under Construction (SF)
Weighted Avg Asking Lease Rate
DOWNTOWN 33,480,846 18.3% 17.7% 20,200 401,925 - 1,176,058 $3.20 Bunker Hill 8,093,972 17.7% 19.2% 120,000 311,235 - - $3.31 Financial District 19,047,053 19.6% 18.9% (139,600) (18,659) - 356,141 $3.21 Greater Downtown 2,723,876 14.3% 13.8% (11,500) 46,981 - 819,917 $2.83 South Park 3,615,945 15.2% 15.9% 51,300 62,368 - - $3.17
WEST LA 58,287,507 11.7% 11.5% (115,700) 41,231 - 815,382 $4.44 Beverly Hills 6,954,069 11.6% 10.9% (52,800) (233,956) - - $5.12 Brentwood 3,339,045 8.7% 9.1% 11,700 (26,165) - - $4.23 Century City 10,661,857 11.4% 11.5% 17,400 44,080 - - $4.69 Culver City 3,988,279 9.9% 10.4% 24,500 145,282 - - $3.47 Marina Del Rey/Venice 6,579,867 11.6% 12.9% 89,900 228,138 - 493,382 $3.74 Miracle Mile 5,387,656 10.9% 10.6% (15,500) 95,549 - - $3.78 Olympic Corridor 3,073,857 2.6% 2.7% 1,900 7,957 - - $3.63 Santa Monica 9,572,802 16.1% 13.8% (224,100) (321,244) - 222,000 $5.36 West Hollywood 3,009,242 13.5% 15.9% 72,700 129,460 - 100,000 $4.65 West Los Angeles 868,524 20.4% 17.1% (28,100) (36,444) - - $3.15 Westwood 4,852,309 11.7% 11.4% (13,300) 8,574 - - $4.15
TRI CITIES 23,459,363 14.3% 14.2% (17,000) 71,413 - - $3.00 Arcadia 622,000 1.7% 1.9% 900 (38) - - $2.39 Burbank 6,832,278 15.6% 15.3% (21,700) (84,071) - - $3.18 Glendale 6,374,971 13.3% 13.1% (12,500) (27,267) - - $2.66 Monrovia 1,139,708 17.0% 17.6% 6,600 149,872 - - $2.48 Pasadena 8,490,406 14.4% 14.6% 9,700 32,917 - - $3.15
SOUTH BAY 33,580,466 16.4% 17.3% 302,100 498,955 - 101,874 $2.28 190th Street Corridor 3,487,239 25.1% 25.8% 26,100 (131,532) - - $2.09 Central Torrance 4,460,943 10.6% 11.4% 34,900 75,458 - - $2.54 Downtown Long Beach 5,074,779 17.3% 18.5% 60,600 106,891 - - $2.25 El Segundo/Beach Cities 11,632,036 10.0% 10.8% 90,000 272,978 - 101,874 $2.93 LAX 4,416,768 35.4% 36.2% 36,700 93,675 - - $1.69 Long Beach Airport/ 4,508,701 12.1% 13.3% 53,800 81,485 - - $2.17
LA NORTH 31,380,361 13.8% 14.1% 77,400 288,542 - - $2.39 Central SF Valley 4,845,878 9.4% 10.7% 60,600 86,285 - - $2.60 Conejo Valley 6,475,526 16.2% 15.7% (36,000) (58,065) 60,467 - $2.31 East SF Valley 2,280,218 10.3% 10.6% 5,900 50,469 - - $2.47 Santa Clarita Valley 2,298,139 16.7% 16.3% (9,800) 35,335 - - $2.47 West SF Valley 15,480,600 14.2% 14.6% 56,700 174,518 - - $2.34
SAN GABRIEL VALLEY 10,255,454 12.2% 12.9% 68,700 64,469 - - $2.23 East San Gabriel Valley 6,569,770 12.2% 12.7% 31,400 18,110 - - $2.24 West San Gabriel Valley 3,685,684 12.1% 13.1% 37,300 46,359 - - $2.23
HOLLYWOOD/MID WILSHIRE 14,572,683 21.2% 21.8% 118,600 234,138 - 438,864 $2.81 Hollywood 4,013,361 24.1% 24.5% 14,600 153,514 - 438,864 $4.36 Mid-Wilshire 10,559,322 20.1% 21.1% 104,000 80,624 - - $2.19
LA COUNTY 205,016,680 14.9% 15.0% 454,300 1,600,673 60,467 2,532,178 $2.99
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Los Angeles Third Quarter 2016 / Office Market Report
* Revisions to building inventory were made effective Q3 2016; historical data reported here reflects these revisions and therefore may not match data reported in previous quarters.
Q3 2016 Inventory (SF)
Q3 2016 Vacancy %
Q2 2016 Vacancy %
Q3 2016 Net Absorption (SF)
YTD Net Absorption (SF)
Q3 2016 Completions (SF)
Under Construction (SF)
Weighted Avg Asking Lease Rate
DOWNTOWN 33,480,846 18.3% 17.7% 20,200 401,925 - - $3.20Class A 18,251,773 15.3% 15.7% 67,300 355,251 - 356,141 $3.33Class B 13,383,929 21.7% 19.9% (40,400) 45,417 - 819,917 $3.16Class C 1,845,144 22.5% 22.2% (6,700) 1,257 - - $2.75
WEST LA 58,287,507 11.7% 11.5% (115,700) 41,231 - 815,382 $4.44Class A 45,301,996 12.9% 12.6% (131,100) (10,100) - 593,382 $4.49Class B 11,753,316 8.2% 8.3% 1,700 51,077 - 222,000 $4.17Class C 1,232,195 2.9% 4.0% 13,700 254 - - $3.67
TRI CITIES 23,459,363 14.3% 14.2% (17,000) 71,413 - - $3.00Class A 16,646,201 14.0% 14.0% 7,200 103,063 - - $3.08Class B 6,148,815 15.8% 15.4% (20,200) (42,917) - - $2.76Class C 664,347 7.3% 6.7% (4,000) 11,267 - - $2.31
SOUTH BAY 33,580,466 16.4% 17.3% 302,100 498,955 - - $2.28Class A 13,395,920 13.4% 14.8% 187,700 85,800 - - $2.69Class B 17,250,555 19.7% 20.2% 73,100 362,634 - 101,874 $2.03Class C 2,933,991 10.0% 11.4% 41,300 50,521 - - $2.14
LA NORTH 31,380,361 13.8% 14.1% 77,400 288,542 - - $2.39Class A 18,267,348 14.0% 14.7% 129,400 160,887 60,467 - $2.54Class B 12,039,848 13.6% 13.1% (55,500) 139,312 - - $2.20Class C 1,073,165 13.4% 13.7% 3,500 (11,657) - - $2.02
SAN GABRIEL VALLEY 10,255,454 12.2% 12.9% 68,700 64,469 - - $2.23
Class A 4,110,082 12.0% 12.7% 27,400 (32,529) - - $2.38Class B 5,414,779 13.1% 13.9% 45,400 94,437 - - $2.19Class C 730,593 6.6% 6.0% (4,100) 2,561 - - $1.97
HOLLYWOOD/ MID WILSHIRE 14,572,683 21.2% 21.8% 118,600 234,138 - - $2.81
Class A 6,696,585 17.7% 18.1% 49,600 119,783 - 438,864 $3.45Class B 6,781,897 24.1% 25.0% 71,500 116,665 - - $2.52Class C 1,094,201 25.1% 24.9% (2,500) (2,310) - - $2.29
LA COUNTY 205,016,680 14.9% 15.0% 454,300 1,600,673 60,467 2,532,178 $2.99Class A 122,669,905 13.8% 14.1% 337,500 782,155 60,467 1,388,387 $3.52Class B 72,773,139 16.8% 16.6% 75,600 766,625 - 1,143,791 $2.64Class C 9,573,636 13.2% 13.6% 41,200 51,893 - - $2.43
Los Angeles Third Quarter 2016 / Office Market Report
Vacancy Rate
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2011 3Q 2012 3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q
Asking Rent
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2011 3Q 2012 3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q
Net Absorption
-2,500,000-2,000,000-1,500,000-1,000,000
-500,0000
500,0001,000,0001,500,0002,000,0002,500,000
2011 2012 2013 2014 2015 2016
Tenant Type Address Submarket SF
ARES NEW 800 CORPORATE POINTE, CULVER CITY WEST LA 97,000
ORACLE RENEWAL 1620 26TH ST, SANTA MONICA WEST LA 92,400
AWESOMENESS TV NEW 2701 OLYMPIC BLVD, SANTA MONICA WEST LA 86,000
XEROX RENEWAL 2277 E 220TH ST, LONG BEACH SOUTH BAY 69,000
WORLEY PARSONS RENEWAL 181 W HUNTINGTON DR, MONROVIA TRI CITIES 67,600
Top Lease
Address Buyer Seller Price SF P/SF
12100 WILSHIRE BLVD, BRENTWOOD DOUGLAS EMMETT/QIA HINES $225,000,000 365,000 $616
PLAYA JEFFERSON, PLAYA VISTA ROCKWOOD CAPITAL VANTAGE PROPERTY $165,000,000 195,813 $775
233 WILSHIRE BLVD, SANTA MONICA DOUGLAS EMMETT/QIA THE BLACKSTONE GROUP $139,500,000 128,935 $1,082
LOS ANGELES TIMES, LOS ANGELES ONNI GROUP TRIBUNE MEDIA COMPANY $105,000,000 576,043 $182
3415 S SEPULVEDA BLVD, W LOS ANGELES THE SWIG COMPANY KBS REALTY ADVISORS $68,200,000 179,334 $380
Top Sales
Address Developer SF Completion
12105 & 12126 W. WATERFRONT DR, LOS ANGELES TISHMAN SPEYER 493,400 Q4 2016
900 WILSHIRE BLVD, LOS ANGELES KOREAN AIRLINES/AC MARTIN PARTNERS 370,041 Q2 2017
5808 W SUNSET BLVD, LOS ANGELES HUDSON PACIFIC PROPERTIES, INC. 323,273 Q1 2017
963 E 4TH ST, LOS ANGELES HUDSON PACIFIC PROPERTIES, INC. 150,000 Q4 2016
1601 N VINE ST, LOS ANGELES J.H. SNYDER COMPANY 128,624 Q1 2017
Under Construction
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A Growing, Multinational Presence Third Quarter 2016 / Office Market Report
Contact Information
Los Angeles - Downtown 555 S Flower St, Ste 3200 Los Angeles, CA 90071 Primary Contact: Ted Simpson [email protected] 213.935.7430
Los Angeles - West 10940 Wilshire Blvd, Ste 2100 Los Angeles, CA 90024 Primary Contact: Jonathan Larsen [email protected] 213.471.1069
Los Angeles - North 6711 Forest Lawn Dr Los Angeles, CA 90068 Primary Contact: Mark Evanoff [email protected] 323.851.6666
Regional Managing Director: Chris Cooper - Corporate 555 S Flower St, Ste 3200 Los Angeles, CA 90071 [email protected] 213.935.7435
Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614 Primary Contact: Stan Yoshihara [email protected]
San Diego - La Jolla 4225 Executive Sqr, Ste 600 La Jolla, CA 92037 Primary Contact: Jerry Keeney [email protected]
Los Angeles - Santa Monica301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy Starr [email protected] 310.899.1800
Research ManagerJennifer Yoo 555 S Flower St, Ste 3200 Los Angeles, CA 90071 [email protected]
A Growing, Multinational Presence
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