MARKET DRIVERS
The Los Angeles office market continues to face challenges, with a stubborn vacancy rate
that remains approximately 186 basis points above the national average. A continued lack of
positive net absorption across the market underscores the persistence of remote and hybrid
work models. As a result, many companies are signing smaller leases, reflecting reduced
space requirements.
Net deliveries are expected to end the year at a low point, largely due to limited new office
construction and a development focus that has shifted toward mixed-use and multifamily projects.
Net absorption remained negative in 2025, however, the 42,530 SF improvement over 2024
suggests the market is declining at a slower rate than in Q4 2024. Market data indicates that
fewer businesses are vacating space, or that there is a modest uptick in tenant demand. This
trends align with early signs of stabilization—small, gradual, but positive.
ECONOMIC REVIEW
Los Angeles, the second-largest metropolitan region in the U.S., has a diverse economy
supported by key industries and a high concentration of creative professionals and higher
education institutions.
In recent years, the region has experienced population decline, driven largely by its high cost
of living. Rising labor challenges and elevated unemployment levels have further contributed
to outbound migration, adding pressure to the office market.
NEAR-TERM OUTLOOK
Los Angeles office market experts expect many spaces to remain vacant, with no clear
catalyst for a broad rebound in leasing activity. Without a resurgence in entertainment and
tech, the city is likely to maintain an oversupply of office space. However, asking rents have
stayed relatively steady across the metro despite minimal supply pressure and weak demand.
4Q 2025 Los Angeles Office Market: Key Data Points
Explore our full Los Angeles office market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy Rate Holds High: Direct vacancy reached 16.0%, while total availability climbed to 20.1%, up 3.45% year-over-year.
- Asking Lease Rates Remain Flat: Average direct asking rent was $3.48 PSF, a slight 0.57% decrease from Q4 2024.
- Leasing Activity Declines Sharply: Total lease transactions fell to 2.6M SF, down 44.6% year-over-year.
- Net Absorption Still Negative: Q4 posted -252K SF, an improvement from -295K SF in Q4 2024.
- Construction Pipeline Persists: Approximately 2.7M SF remains under development, with major projects in West LA and Mid-Wilshire.
- Sales Volume Drops: Sale transactions totaled 1.47M SF, a 59.3% decline year-over-year.
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