The LA office space market is showing signs of recovery, breaking away from the prolonged slump that followed the COVID-19 pandemic.
According to data from real estate services firm Savills cited by commercial real estate media outlet Commercial Observer, total office space leased in LA County reached 4 million square feet in the third quarter of this year.
This represents a 15% increase compared to the same period last year, and a 0.7% rise from the previous quarter.
However, market recovery was primarily driven by lease renewals of existing tenants rather than new move-ins. Among the top 10 large lease transactions signed in the third quarter, 6 were renewals.
The largest transaction was a 144,700-square-foot renewal in El Segundo by defense contractor Raytheon. Following that, global accounting and consulting firm PwC signed a deal to relocate to 138,000 square feet of office space in Century City. Pepperdine University also renewed a 117,500-square-foot lease near Marina del Rey and Playa Vista.
In addition, Innocean USA, the Hyundai Motor Group-affiliated advertising agency, secured 101,000 square feet of office space in El Segundo to relocate, making the list of major large-scale lease agreements.
Decline in Available Space and Sublease Glut
As office lease transactions increased, available space on the market decreased accordingly.
Available office space in LA County decreased by 1.1% from the second quarter and 1.7% compared to the same period last year.
Notably, sublease inventory—where existing tenants put their remaining space back on the market—dropped from 8.7 million square feet last year to 6.3 million square feet this year. Sublease availability has now declined for eight consecutive quarters.
The available office space ratio in Miracle Mile stood at 39.2%, the highest in LA County. Burbank followed at 37.1% and Culver City at 37.0%. In these areas, more than one-third of the total office space remains available, showing a clear disparity in regional demand.
Stable Rental Rates Across Regions
Rental rates showed an overall stable trend. The average asking rent for LA County offices in the third quarter fell 0.2% from the previous quarter, but rose 0.6% compared to the same period last year. Asking rents for Class A high-end office buildings rose 0.8% year-over-year.
Regional rental rates were highest in Century City at $7.61 per square foot, followed by Beverly Hills at $6.71.
