Key facts
- Los Angeles' office vacancy rate increased to 25.8% in the second quarter.
- Creative industries, including entertainment and tech, are slower to return to offices compared to finance and law firms.
- Downtown LA and the Hollywood/Wilshire Corridor experienced significant vacancy increases.
- Century City and the Westside submarket showed stronger absorption and occupancy.
- Negative absorption in LA totaled 432,000 SF in Q2, with 3 million SF over the last 12 months.
- Total leasing activity in LA decreased by 12.4% from the previous quarter.
Los Angeles' office market is lagging behind the national recovery, with its vacancy rate climbing to 25.8% in the second quarter. This trend is largely attributed to the slower return-to-office patterns of the city's dominant creative industries, including entertainment and technology firms. In contrast, financial and legal sectors, which are more heavily concentrated in areas like Century City and the Westside, are driving absorption and occupancy gains.
Downtown Los Angeles and the Hollywood/Wilshire Corridor submarkets experienced the most significant increases in vacancy, reaching 35.3% and 28% respectively. Meanwhile, the Westside, particularly Century City, demonstrated resilience with a vacancy rate of 23%. This submarket accounted for a substantial 38.4% of the region's leasing activity, bolstered by major deals such as PwC's 138,000 square foot lease. Financial services and law firms, known for their stronger mandates for in-person work, comprise the primary tenant base in these Westside areas.
Overall, the city faced considerable headwinds, with negative absorption totaling 432,000 square feet in the second quarter and approximately 3 million square feet over the past twelve months. Total leasing activity across Los Angeles saw a 12.4% decrease from the first quarter, reaching 4.5 million square feet. This contrasts with markets like New York and Dallas, which have benefited from a higher concentration of financial institutions and a more assertive push for office returns.