Los Angeles Office Market Report

4th Quarter 2021

Posted In — Market Research | Market Report


DIRECT NET ABSORPTION for the first time since the start of the pandemic reported positive gains in 4Q 2021 with 637K SF.

SUBLEASE AVAILABILITIES continued to drop after peaking over 9.7M SF in 1Q 2021, falling by 10.5% to 8.7M SF in 4Q 2021. Silicon Beach continues to thrive due to healthy demand fundamentals stemming from the tech industry and the Tri- Cities markets are beginning to experience expansion efforts from media firms and healthcare. Additionally, average asking rates for Class A sublet space are $0.35/SF less than direct space, making it desirable for tenants.

DIRECT ASKING LEASE RATES remained stagnant, concluding at $3.45/SF on a full-service basis. Landlords have offered discounted rents and many concessions and incentives to lure or retain tenants.

USER SALES continue to be in high demand as many tenants have applied their focus towards purchases in order to build equity with 54 transactions completed in 4Q 2021. The average sale price in 4Q 2021 was $486.78/SF with cap rates at 5.4%.


AS OF NOVEMBER 2021, the unemployment rate fell 70 basis points (bps) from the month prior to 7.1%.

COUNTRYWIDE JOB LEVELS increased by 42,500 between October and November with the retail trade sector expanding by 14,000 jobs.


TECH AND ENTERTAINMENT industries will continue to lead the way in Silicon Beach while Downtown Los Angeles is expected to improve at a slower pace. Rents should remain stagnant with landlords offering concessions in order to maintain rental rates as much as possible. Although it is yet to be seen, with signs of the Omicron Variant across the metro many tenants may further delay returning employees to the office. As signs of normalcy begin to develop, fundamentals will certainly be tested as tenants who made short-term solutions during the pandemic will once again need to assess their real estate footprint in 2022.

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