April Job Growth in Office Occupying Sectors Signals Continued Support for Southern California Office Markets

Steady hiring in healthcare and professional services provides an important foundation for regional office demand as vacancy rates begin to stabilize.

Stronger than expected April job growth in office occupying sectors offers an encouraging sign for the remainder of 2026.

The U.S. economy added more jobs than expected in April, with the Bureau of Labor Statistics reporting 115,000 new nonfarm payroll positions last month. This surpassed economists’ consensus estimate of roughly 55,000 and extended a streak of positive readings following March’s strong 178,000 job gain. The unemployment rate held at 4.3%, consistent with a labor market that continues to cool gradually without deteriorating.

Healthcare led hiring gains with 37,000 new jobs, while professional, scientific, and technical services, office administrative services, and temporary help services combined to add 23,500 positions, an encouraging sign for office occupying sectors.

Against this backdrop, the Southern California office market is showing its own resilience. The regional vacancy rate edged down to 14.0% this quarter from 14.2% the prior quarter. While slightly above the 14.2% recorded a year ago, it represents a meaningful stabilization.

Average asking face rents across the region rose to $2.84/FSG, up 1.2% quarter over quarter and 2.3% year over year. Meanwhile, sublease asking rents tell a more contrasting story, averaging $2.23/FSG. This represents a 0.3% increase from last quarter but a 5.0% decrease year over year.

​Q1 2026 Market Highlights

Los Angeles County carries the region’s highest vacancy rate at 16.7%, though it posted improvement quarter over quarter, dipping 10 basis points from 16.8%. Face rents rose to $3.46/FSG, up 1.2% from last quarter and essentially flat year over year at -0.3%. Sublease rents climbed to $2.88/FSG, up 7.1% quarter over quarter and 4.7% year over year, yet still represent a 16.8% discount to direct face rents as sublessors compete to offload space leased at peak pricing.

Orange County saw vacancy fall to 11.5% from 11.9% last quarter and 12.4% a year ago, the strongest year over year improvement in the region at nearly 100 basis points. Face rents climbed to $2.86/FSG, up 3.2% quarter over quarter and 2.1% annually. Sublease rents softened to $1.81/FSG, down 1.1% quarter over quarter and 11.3% year over year, a 36.7% discount to direct space. This is the steepest gap in the region and a sign that sublessors are cutting aggressively despite improving overall fundamentals.

Inland Empire leads the region with the lowest vacancy rate at just 4.7%, unchanged from last quarter and well below its 5.1% rate a year ago, reflecting tight fundamentals and sustained demand. Face rents of $2.35/FSG reflect a market with limited available space and stable pricing. Sublease rents of $2.32/FSG are nearly at parity with direct space, a 1.3% discount that underscores how much leverage sublessors hold in this supply constrained market.

​Ventura County posted a vacancy rate of 12.9%, down from 13.2% last quarter, though up from 12.2% a year ago, reflecting some longer term absorption challenges even as near term conditions stabilize. Face rents of $2.68/FSG are up 7.6% year over year, the strongest face rent growth in the region. Sublease rents declined to $1.89/FSG, down 4.1% quarter over quarter and 12.9% year over year, a 29.5% discount to direct space as sublessors price competitively to move space in a market still working through above average vacancy.

​​Outlook

​A labor market that continues to add jobs supports baseline office demand. Healthcare hiring, which drove April’s gains, aligns with tenant profiles active in markets where landlords are successfully transitioning buildings to medical use. With the Federal Reserve expected to hold rates steady in an environment of persistent inflation, financing conditions are unlikely to shift materially. This reinforces a “steady as she goes” posture for commercial real estate.

The gap between firming face rents and softening sublease rents points to a two speed leasing environment. Landlords are holding the line on direct pricing while tenants with surplus space grow more competitive to move it. How that plays out is among the Trends to Watch for the region through the remainder of 2026.