Second Quarter 2025 Trends

Office Recovery Cools with Summer Slowdown in Los Angeles County

New office towers sit largely vacant as tenant demand shifts toward sublease opportunities.

Vacancy rose to 16.9% in Q2 2025 as newly delivered space stayed unleased and leasing volume fell 15% compared to the first half of 2024.

WLA’s LUMEN | 545,233 SF office campus built in 2022 with 65,000 SF of private outdoor space. Amenity-rich and currently 37.5% leased.
 
Managing Director of Research and Public Relations at NAI Capital Commercial
 
As Los Angeles County’s skyline welcomes sleek new office towers, nearly a third of their space sits empty, casting a shadow over the region’s commercial real estate recovery in Q2 2025. Preliminary data reveals a market grappling with weak demand, unleased new construction, and rising vacancy, dampening the momentum seen earlier this year. Despite elevated vacancy, many landlords remain reluctant to lower asking rents, further stalling leasing activity.
 
Preliminary figures show that 28.9% of office space delivered since 2020—totaling 3.04 million square feet—remains available for lease, with approximately 503,000 square feet offered for sublease. While overall sublease availability continues to grow, Q2 saw a modest 50,000-square-foot decline in sublease vacancy, hinting at renewed interest in these financially attractive options.
 

Shifting “return to office” trends and evolving workspace strategies continue to slow absorption. The overall vacancy rate rose 20 basis points quarter over quarter to 16.9%, up from a year ago and above the national average of 14.1%. Total vacant office space reached 67.5 million square feet—an accumulation driven by an average of more than 830,000 square feet of newly vacant space added each quarter over the past two years.

Despite the oversupply, direct asking rents remain nearly flat at $2.83/SF full-service gross, down just three cents year over year. Leasing volume for the first half of 2025 declined 15.1% to 8.6 million square feet compared to the same period in 2024, prompting many landlords to offer concessions such as free rent and flexible lease terms to attract tenants.

Looking ahead, property owners may need to rethink strategies, embracing deeper concessions, redesigning floorplans, or repositioning space for hybrid work, to reignite momentum. The second half of 2025 will test whether Los Angeles County’s office market can rebound and how swiftly it can recapture the traction seen in early 2025.