Q1 2024 Office Market Outlook – Los Angeles
Market Overview
Despite the continuous rise in vacant space, weak demand, and unoccupied new construction hinder the LA County office market’s slow journey to recovery. Landlords, wary of adjusting asking rent despite elevated vacancy rates, face a challenge to spur occupancy. In Q1, completed office construction added to the inventory since 2020 remains mostly vacant, at 31.3%. Additionally, the market grapples with a significant influx of sublease office spaces.
Trends to Watch
The abundance of office space concerns landlords while granting tenants leverage in negotiating favorable deals. However, the surge in available office space is driven by the evolving landscape of remote work, space utilization strategies, and employment trends. Companies actively reducing excess office space have led to a significant increase in available sublease space quarter over quarter, up by 5.8% since the end of 2023 and 2.7% higher than Q1 2023, totaling approximately 11.5 million square feet—a new all-time high. In the South Bay, available sublease space now exceeds three times that of Q1 2009 during the Great Recession. Traditionally, the South Bay office market served as an outlet for overflow demand from LA West. With office space availability in LA West at an all-time high of 23.4%, twice the amount available in Q1 2009 during the Great Recession, the market is saturated with available office space.
