Los Angeles’ office market closed out 2017 with rents and vacancy rates holding steady, but Downtown fared worse, as vacancy rates there spiked, according to a new report.
DTLA stood out for its high 20.6 percent vacancy rate, according Colliers International’s fourth quarter report. The area’s 1.7 million square feet of space under construction was also more than any of the other two submarkets the broker tracked. In another worrying sign, 80 percent of that space under construction remained available.
DTLA’s sizable amount of construction was 300,000 square feet more than West L.A., the next largest. Downtown is also ground zero for concerns about future oversupply, although insiders say the risk of overbuilding is real across all of L.A. County.
The two largest Downtown projects were Waterbridge Capital’s 400,000-square-foot Broadway Trade Center at 801 South Broadway, and 757 South Alameda Street’s 425,000 square feet.
The Colliers report looked at market conditions in three submarkets: West Los Angeles, Tri-Cities, and Downtown. Citywide, average rent was $45.94 per square foot and the vacancy rate was 15.4 percent, about even from the previous quarter.
For the overall city office market, net absorption was just under 90,000 square feet from October through December. That was down from 877,100 square feet in the previous quarter, a contributing factor to the steady rents and vacancy rates.
West Los Angeles was a standout.
It was the only one to post positive absorption last year and its 13.6 percent average vacancy rate was below market. It also had the highest rent rates of any other submarket at $55.30 per square foot.
Tri-Cities had a similarly low vacancy rate, helped by Burbank’s sub-11 percent rate.