UPDATED, Oct. 5, 2020, 9:18 a.m. More than 1 million square feet of sublease space went on the market in Los Angeles County in the second quarter, as transaction volume plummeted during the stay-at-home lockdown and difficult reopenings.
Available sublease spiked to 6.1 million square feet, from 5 million during the first quarter, the largest quarterly increase on record, according to NAI Capital.
New leases were way down as were investment sales, NAI noted. The 1.8 million square feet of new leases from April through June was nearly 60 percent less than January through March, while the 1 million square feet of closed investment sales was 55.1 percent below first-quarter figures.
Commercial tenants were not exiting their leases outright, however. The vacancy rate increased by a fraction to 10.8 percent from the first quarter. The federal government’s Paycheck Protection Program has buoyed occupancy by helping tenants offset lost income brought on by the coronavirus pandemic, according to the report.
NAI reported that countywide leasing activity in the second half could fall to levels not seen in more than a decade, if the pandemic is not under control.
“Year-to-date, sales and leasing volume combined was 45.2 percent of the total for all of 2009 in the depths of the financial crisis,” the NAI report said.
For the second quarter, the typically strong West L.A. submarket saw the most leasing activity, with tenants signed to over half a million square feet of space. That represented more than a quarter of the total across L.A. County. Just 2,800 square feet of space was sold in West L.A., however.
Around 631,000 square feet traded hands in the tri-cities of Pasadena, Glendale and Burbank, more than any other submarket. Atlas Capital Group’s $72 million purchase of the 315,000-square-foot office building at 101 S. Marengo Avenue in May accounted for about half of that.
Correction: A previous version of this article incorrectly stated that 5 million square feet of sublease space hit the market in the second quarter of 2020. Five million square feet of space was the first-quarter amount. The increase from Q1 to Q2 was 1.1 million square feet.