Downtown Office Vacancy Rate Last Quarter Was 10% : But Increase Is Expected by Leasing Service With Several Buildings Coming on Line Soon
Office vacancies in downtown Los Angeles rose to 10% during the second quarter this year and are expected to rise further, perhaps 15% to 20%, but bargain hunters may meet a surprisingly strong demand, according to Grubb & Ellis Commercial Brokerage Services.
The downtown vacancy rate rose from 8.4% in the first quarter, with about 2 million square feet vacant in a total downtown base of 19.7 million square feet. A year ago the downtown rate was 10.79%, dropping by year’s end to 8.38%.
“This low vacancy factor is the calm before the storm,” according to Jeffrey T. Carey, Grubb & Ellis Los Angeles vice president and district manager. “With so many new projects scheduled for completion in the next few months, vacancy rates are going to ratchet upward, at least temporarily.
“But anyone who thinks the downtown market is a house of cards waiting to collapse should think again, it’s not going to happen.”
A dozen buildings totaling more than 5 million square feet are under construction in the Central Business District, the survey reported. Pre-leasing of those buildings currently stands at 1.3 million square feet but lease signings are gaining momentum and could exceed 2.5 million square feet by year’s end.
The survey also showed annual rental rates in existing downtown buildings range from $18 to $32 per square foot, and $22 to $28 in buildings under construction. Vacancy rates in other areas are: Mid-Wilshire, 14%; Pasadena/Glendale, 20%, and San Gabriel Valley, 32%.
