There has never been so much office space available in Los Angeles.
About 25.4 percent of office square footage in L.A. was available for lease in the third quarter — up 30 basis points from the prior quarter, according to a Savills report. By comparison, about 18 percent of office space was available for lease in the fourth quarter of 2019.
“This is now the highest availability ever reported in the Los Angeles office market as leasing activity remains below pre-pandemic levels,” the report stated.
About 3.1 million square feet worth of leases was signed in the quarter, up from 2.8 million square feet during the previous quarter. Tenants decided to sublease about 600,000 square feet during the most quarter.
The majority of that came from two companies: Netflix put up about 180,000 square feet in Burbank on the market and PayPal looked to sublease about 130,000 square feet in the Arts District, where its subsidiary Honey has its headquarters.
Subleases have piled up for the last year, as tenants have started reconsidering costs, employee needs and locations. And after interest rates started to hike over the summer, some companies started reversing course and shrinking their footprints.
As of April, Lionsgate was firmly committed to its Santa Monica headquarters. The movie studio behind the “Hunger Games” films signed a short-term extension on its nearly 200,000-square-foot lease at 2600 Colorado Avenue. But by September, the company had put about 20 percent of it up for sublease for $5 a square foot per month.
The largest lease deals during the period were renewals — companies committing to staying in their space, rather than making any sudden moves. In West Hills, Quest Diagnostics renewed its lease for about 200,000 square feet, while Raytheon agreed to stay in 144,700 square feet at 2000 East El Segundo Boulevard in El Segundo.
Despite this increase in availability, L.A. office landlords don’t seem willing to budge much on rents. Average asking rents in the third quarter were $3.86 per square foot a month, compared to about $3.87 in the second quarter.
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