Los Angeles County office market fundamentals have improved substantially in the third quarter of the year, with vacancy rates dropping and 11 submarkets with single-digit overall vacancy, according to Cushman & Wakefield’s Third Quarter Southern California Office Report.
Overall vacancy decreased 1.5 percentage points (pps) year-over-year to 17.0%, the largest drop in Southern California in the third quarter. The largest decrease came from the Los Angeles West submarket. Additionally, leasing activity in Los Angeles County is strong.
“As of mid-year, most market fundamentals remained on par with the previous quarter and year,” said Petra Durnin, Managing Director of Research for Cushman & Wakefield in Los Angeles. “In third quarter, there was a dramatic shift with significant growth that elevated market fundamentals to an unprecedented level. Los Angeles County’s leasing activity is on track to surpass 2013 activity. Of the 2.3 MSF of year-to-date occupancy gains, 1.1 MSF occurred in the third quarter alone.”
The Lower Westside was the healthiest submarket in Los Angeles in the third quarter. Playa Vista’s overall vacancy was 24.8%, representing a 14.8 pp drop compared with last year. Direct vacancy decreased to 21.0% from 34.1% one year ago.
This robust performance was spurred by several factors. The city serves as an ideal location for technology, advertising and new media companies and offers prime real estate for large office spaces. Verizon (Edgecast) leased the remaining (83,000 SF) office space at The Reserve, located at 13031 W. Jefferson Blvd., with plans to move in in the second quarter of 2015.
Playstation moved in to 80,049 SF at The Reserve and expanded an additional 18,969 SF in the third quarter—this boosted Playa Vista’s direct absorption to 263,927 SF.