Office Availability Varies in Los Angeles and Orange County

Los Angeles and Orange counties attracted quite different office tenants in the last quarter, showing that law, finance, retail and education could lead the way to office market recovery

So-called traditional entities like law firms and financial companies are predicted to take up more office space in the county as tech and entertainment retreats, according to new reports from Avison Young and Savills.

“New space demand continues to be low in the entertainment/media sector amidst uncertainty over industry consolidation, as well as the ongoing shift of production out of Los Angeles,” Savills said in its second-quarter report. The film and TV industry’s payroll last year was down 25 percent from a peak in 2022, according to Otis College of Art and Design’s annual Report on the Creative Economy.

In L.A. County, Oaktree Capital Management Financial Services topped the list of quarterly lease deals with a 220,000-square-foot relocation to 555 South Flower Street in Downtown Los Angeles. It was followed by West Coast University’s renewal of its lease for 98,000 square feet at 12215 Victory Boulevard in North Hollywood.

Other financial services firms held spots in the top 10 biggest deals in L.A. County in the second quarter, including AmeriHome Mortgage’s 80,371-square-foot renewal at 1 Baxter Way in the San Fernando Valley and Primecap Management’s 37,528-square-foot renewal at Primecap Management in Pasadena. These moves by financial companies align with Avison Young’s mid-year outlook.

In the O.C., leases by educational institutions like The Regents of the University of California and the University of California, Irvine leased more than 150,000 square feet between the two of them. Other top 10 leases by size in the O.C. include nonprofit Regional Center of Orange County’s renewal for 81,646 square feet and Serendipity Labs’ new 39,053-square-foot location in Costa Mesa.

As L.A. County saw its office availability — the number of vacant units plus any space that is actively being marketed for lease, even if occupied — tick up to 28.1 percent from 27.4 percent year-over-year, Orange County’s dropped from 23 percent to 21.4 percent in the same time frame. L.A. County now has 214.1 million square feet of office inventory, while Orange County boasts 81.2 million square feet.

At the same time, the overall average asking rental rate in L.A. County increased to $3.99 per square foot from $3.90 in Q2 2024. Orange County’s rents edged down to $2.80 from $2.83 in Q2 2024.

Orange County’s dip in office availability comes amid a streak of office demolitions and conversions as vacancy remains lower than in L.A. County. The OC has 4.2 million square feet of office space prepared for conversion to residential or other uses, representing 4 percent of its total office market. By contrast, L.A. County has 1.2 million square feet of offices heading to conversion or teardown. At the moment, the $4 billion OCVibe project in downtown Anaheim is the only project in Orange County that is projected to add future office space rather than convert or demolish it, Savills said. That development, spearheaded by Anaheim Ducks owner Henry Samueli, is expected to begin opening by the end of this year.