In an interview about the office leasing market in Los Angeles, we gained insight into recent trends showing signs of recovery post-pandemic. According to the latest data from real estate services provider Savills, the transaction volume for office leases in Los Angeles County surged by 27% in the third quarter of 2024 compared to the same period last year. Monthly rental rates have stabilized at approximately $3.90 per square foot, yet questions remain about whether the market has truly shifted from a crisis mode to stability.
During the pandemic, office leasing activity in Los Angeles County saw a significant decline due to the rise of remote work. However, the market is slowly rebounding. Notably, the third quarter transaction volume reached 3.8 million square feet, marking the highest level since the outbreak began four years ago. This is nearly back to the pre-pandemic level of 4 million square feet leased in the first quarter of 2020.
Despite these positive indicators, the office vacancy rate in Los Angeles continues to rise. In the third quarter of 2024, it climbed to 28.3%, an increase of 0.9% from the previous quarter and up by 1.8% compared to the same time last year.
Interestingly, even with the increase in vacancies, average monthly rent has remained steady at $3.90 per square foot. However, the trend of “quality over quantity” in office spaces is emerging, particularly in Century City and across Southern California, where Class A office rents have seen a year-on-year increase of 1.7%.
While job growth related to office space, especially in the tech and entertainment sectors, has contributed to rising leasing activity, there is still a need for cautious optimism. The report highlights that “office leasing activities will be closely monitored to determine whether the Los Angeles office market has transitioned from crisis to stability or if further recovery is needed.”
This summer, several noteworthy office leasing deals occurred, including Southern California Gas Company leasing 198,600 square feet at 350 South Grand Avenue in downtown Los Angeles last month, and JPMorgan Chase signing a renewal and expansion lease for 162,700 square feet at 2029 Century Park East in Century City.
