Greater LA’s 4M sf of office leases is 25% dip from previous quarter

Tech firms continued to drive office leases in Q3, but couldn’t match Q2’s results, according to the latest Savills report

Oct.October 03, 2019 02:00 PM
The Tower
The Tower

In the Greater Los Angeles office market, Century City may be the hottest ticket in town.

The Westside remains the tightest market to lease office space in L.A., and the Century City submarket tops the list, according to a third quarter report from commercial brokerage Savills.

Century City’s vacancy rate was 7.6 percent, compared to Santa Monica and Beverly Hills/West Hollywood submarkets, which reported 12.4 percent and 14.1 percent respectively.

But the news wasn’t all good.

Overall leasing activity in Greater L.A. stood at 4 million square feet, down from 5.3 million square feet in the second quarter, which marked a three-year high. For there quarter, construction activity stood at 4 million square feet in the pipeline, and more than half of that was preleased.

Burbank — which had an 11.9 percent vacancy rate — was also a hotbed of activity. Nearly 21 percent of major transactions for the quarter happened in the entertainment-dense submarket, according to the report. That included Disney’s 115,674 square foot lease at Worthe Real Estate Group’s Tower Burbank at 3900 West Alameda Avenue, and Warner Brothers’ 108,167 square foot lease at 3400 West Olive Avenue.

Meanwhile Culver City, which has attracted tech titans like Apple and Amazon, clocked in with a 17.7 percent overall office vacancy rate.

Rates for the Westside submarkets were well above the average, with Beverly Hills/West Hollywood nabbing the top spot with $5.47 per square foot, according to the report. That was followed by Santa Monica at $5.39 a foot and Century City, at a $5.34 a foot. Culver City stood at $4.19 per square foot.

Premier office product also drove vacancy rates among the technology and co-working tenants, which signed on for a combined 690,000 square feet of space in the third quarter. Tech and the likes of so-called FAANG companies: Facebook, Amazon, Apple, Netflix and Google, preferred low- to mid-rise creative office campus layouts while more traditional industries like legal services, finance and insurance still opted for Class A high-rises.

Vacancy rates for prime Class A office product stood at 17.5 percent, slightly better than the overall office vacancy rate of 18.6 percent. Asking rates were also higher for Class A properties: $3.67 a foot compared to the overall asking rates of $3.46 a foot.

Related Articles

Los Angeles skyline (Credit: iStock)

LA office leasing drops in Q4 amid WeWork, tech sector pullback

Sares-Regis Principal William Thormahlen & photo of Wakaba LA

In latest deal, Sares-Regis sells Little Tokyo resi complex for $116M

Beny Alagem with the Beverly Hills Waldorf and the Beverly Hills Peninsula Hotel (Credit: Google Maps, Getty Images and iStock)

Hotel spy games: Beny Alagem’s Waldorf planted a mole inside the Peninsula to steal clients, lawsuit says

GPI Companies founders Cliff Goldstein and Drew Planting with a rendering of the project

GPI Cos. starts work on West Hollywood luxury resi complex

Regulatory fees are culprit in housing building costs (Credit: iStock)

It costs $500K to build one affordable housing unit in LA

A rendering of the project (Credit: Ian Espinoza Associates vis Urbanize)

Westfield adds affordable units to $1.5B Promenade redevelopment

A federal court judge in LA tossed out Zillow lawsuit filed by developer Bruce Makowsky (Credit: iStock)

LA judge tosses out Bruce Makowsky lawsuit against Zillow

North Office at 301 Canon Drive and Jamie Duran

Coldwell Banker closes an office in Beverly Hills, and throws a big party