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Los Angeles Office Market Report

4th Quarter 2023

Posted In — Market Research | Market Report

MARKET DRIVERS

THE LOS ANGELES OFFICE MARKET is expected to remain slow due to a persistent shortage of leasing activity and increasing vacancy rates. A few encouraging signals still exist, including government agencies in Los Angeles leasing large blocks of office space.

TENANTS are still evaluating offices needs, with many identifying alternative office geographies, offering offices for sublease, and reducing the size of their office footprints as companies navigate the tension between company needs and employee demands. Tenants continue to have more negotiating power and leverage, allowing them to ask for more substantial tenant improvements and other concessions, often putting landlords in challenging positions as there is greater scrutiny on occupancy and lending requirements.

ECONOMIC REVIEW

THE ECONOMY is predicted to keep growing moderately and slightly in 2023. As businesses expand and more jobs are created, there may be a rise in the need for office space.

THE OFFICE MARKET could benefit from acceptable local and state laws that encourage companies to move to Los Angeles.

NEAR-TERM OUTLOOK

ALTHOUGH OVERALL MARKET CONDITIONS seem weakened, West Los Angeles has experienced a higher amount of tenant interest. Conventional tenants have favored the submarket as a transition from a higher-quality building to a higher-quality location.

LOS ANGELES has promoted creative and innovative centers to attract small business owners, media companies, and tech startups. These strategic locations may increase regional demand for office space, benefiting this office market.

AS COMPANIES LOOK to accommodate in-person and remote work, adopting hybrid work models—where employees work both in the office and remotely—could result in a more steady demand for office space.

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