The Los Angeles office market showed continued improvement during the fourth quarter of 2016, so says a report released by real estate services firm Cushman & Wakefield.
Across the L.A. metropolitan region, rental rates have increased by 6.8% over the past year, driven by occupancy gains in most industry sectors. Sales activity showed a similar increase, while new construction remains high in submarkets that cater to the technology, advertising, media and information industries.
However, the overall absorption rate for Greater L.A. slowed to 2.5 million square feet in 2016, down from 3.9 million square feet in 2015. The regionwide vacancy rate also increased slightly to 14.1 percent, up from 14 percent in the previous two quarters.
The Westside continues to command the highest rental rates in the L.A. County, with Class A buildings in both Beverly Hills and Santa Monica commanding more than $5 per square foot. Century City came in a distant third, with an average asking rate of $4.60.
Slightly over 2 million square feet of new space is now being built throughout the Los Angeles area, the vast majority of which is located west of Downtown. Much of the new construction within the Central City can be accounted for by the $1.2-billion Wilshire Grand Center, a mixed-use project which also includes a 900-room Intercontinental Hotel.
Despite the submarket's long-term struggles, Downtown L.A. actually claimed the two largest leases of 2016.
City National Bank, following its acquisition by the Royal Bank of Canada, claimed 242,000 square feet at Bunker Hill's Two California Plaza in December. The deal also includes signage and naming rights for the 52-story tower.
The Arts District, long envisioned as a mecca for creative tenants, landed a white whale in October, when Warner Music Group announced that it would decamp from its longtime Burbank home for 257,000 square feet at Shorenstein's Ford Factory.