Fires, Tariffs Hinder Recovery of LA Office Market

The Los Angeles office leasing market is currently heavily skewed in favor of tenants, as the region grapples with record-high vacancy rates.

At the start of 2025, countywide office vacancy hit 24.2 percent, according to the Los Angeles Times citing data from brokerage CBRE. Factoring in “shadow space” — leased but unused offices — the availability rate exceeded 29 percent.

That far surpasses a healthy market threshold and signals significant challenges for landlords, despite many companies pushing for in-person work.

The market had shown signs of recovery at the end of 2024, with notable leases from companies such as Mattel and Jazwares, and a stronger return-to-office trend. But January’s wildfires and economic turbulence related to tariffs under President Donald Trump’s policies quickly dampened optimism. Those events introduced uncertainty, causing businesses to pause decisions, delay initial public offerings and reconsider office expansions.

As such office demand remained weak, particularly in Downtown L.A., where vacancy reached nearly 34 percent. Downtown has long faced challenges, which the pandemic exacerbated, causing property values to fall and landlords to struggle with necessary renovations and tenant concessions.

One exception to the countywide softness is Century City, a long-standing hub for law firms and entertainment companies. The submarket boasted a low vacancy rate at 13 percent and premium rents nearing $7 per square foot, far above the county average of $4.29. With high demand and security, Century City has become increasingly attractive, luring firms away from downtown.

In March, Savills announced it was consolidating its downtown L.A. and Westwood offices with a move to Century City. The brokerage took a 20,000-square-foot full floor at 1900 Avenue of the Stars.

The under-construction 37-story Century City Center, anchored by Creative Artists Agency, is already nearly fully leased ahead of its 2026 opening.

Sales of office buildings have slowed as investors question future property appreciation. But some public and private buyers are taking advantage of steep discounts.

For example, Los Angeles County acquired the Gas Company Tower at a fraction of its 2020 value, and Kingsbarn Realty Capital recently purchased the fully leased Vine Street Tower in Hollywood for $105 million.

— Joel Russell