Office leasing was dismally low in Los Angeles County in the second quarter as the coronavirus pandemic kept people at home and businesses recalculated their needs for space.
Leasing transactions were around 60 percent to 70 percent below normal in the second quarter, according to CBRE. Leasing hasn’t been that low since the Great Recession.
“The combination of market uncertainty and the fact that it was difficult to tour space meant that transactions dropped dramatically,” said CBRE researcher Eric Willett.
While tenants and landlords are signing few new leases, the market is otherwise steady. The overall vacancy rate of 12.8 percent is lower than it was in the second quarter of 2019 and monthly asking rents for Class A offices are steady at around $3.87 per-square-foot.
That seems contrary to some predictions that vacancy would rise and asking rents fall in the second quarter as landlords renegotiated leases and offered concessions to attract and keep tenants. It’s possible that could start happening later in the year.
Landlords might have to budge on at least some lease terms, particularly the length of leases. More prospective tenants are interested in leases under 18 months instead of the traditional five or 10 year terms.
“We’re still in a period of intense economic and medical uncertainty,” Willett told the Los Angeles Times. [LAT] — Dennis Lynch