LA expects 7M sf of new office space delivered in 2021. That’s a problem

Developers are on track to complete 6.9 million square feet of new office space in Los Angeles this year, more than any other market in the country.

The total is about three quarters of the 8.9 million square feet of space under construction in L.A., according to Commercial Observer, citing Yardi Matrix data.

Boston — 6.6 million square feet and San Francisco — 5.7 million square feet — were the second- and third-most active markets for new office space.

The expected office deliveries come at a particularly precarious time for developers and landlords. The pandemic has emptied out offices in cities from coast to coast, accelerating and in many cases making permanent the work-from-home world.

In L.A, total office availability hit a 10-year high in December. Just 10 million square feet of space was leased in all of 2020, down from 18 million square feet the year prior.

Even last year’s priciest office investment sale — Silverstein Properties’ $430 million acquisition of U.S. Bank Tower in Downtown L.A. — closed at a significant discount to its pre-pandemic valuation.

Nearly two thirds of the space set for completion this year is being developed in the Westside, consistently one of the city’s most active submarkets.

[CO] — Dennis Lynch