Powered by Savills Research & Data Services
Q1 2023 – Office
01
Office-using Employment Growth
Asking Rent and Availability
Leasing ActivityKey Statistics
Outlook
02
03
In Q1 2023, the Los Angeles office market continued to see a lower level
of leasing activity with 2.9 million square feet (msf) leased. This was flat
from last quarter, as well as down 19% from 3.6 msf reported a year ago.
This was also below the 5-year quarterly leasing average of 3.3 msf.
With continued economic uncertainty spilling over from late-2022,
expect leasing activity to remain low in 2023 as most discretionary
lease deals are now on the sidelines.
Total availability rate ticks up to 26.2%
Office availability increased 20 basis points (bps) from 26.0% reported
at year-end 2022 to 26.2% in Q1 2023. This is now the highest
availability ever reported in the Los Angeles office market as demand
continues to be below pre-pandemic levels. In addition, available
sublease space has increased to 10.4 msf, up from 10.3 msf reported
last quarter, as well as up from 9.1 msf reported a year ago. The overall
average asking rental rate decreased yet again from $3.85 per square
foot (psf) per month reported last quarter to $3.83 psf per month. The
Class A average asking rental rate also decreased from $4.05 psf per
month reported last quarter to $4.01 psf per month as downward
pressure on average asking and effective rental rates continues.
Expect more office property distress this year as interest rates rise
As mentioned above, most discretionary lease deals remain on the
sidelines as many occupiers who do not have near-term lease
expirations take a wait-and-see approach. In addition, it is important to
note that with rising interest rates, worsening property fundamentals,
and decreasing building valuations, there will be more office property
loan distress around Los Angeles in 2023 as many owners find
themselves underwater on their properties. With the exception of only
a few submarkets such as Century City, the overall Los Angeles office
market is forecasted to see more distress and tenant-favorable
fundamentals as office owners aggressively compete for occupancy in
an uncertain economic environment.
Los Angeles
Q1 2022 Q1 2023 Y-O-Y
Inventory
220.2 msf 221.1 msf +0.9 msf
Availability Rate
25.3% 26.2% +90 bps
Asking Rental Rate
$3.88 $3.83 -1.3%
Class A Asking Rental Rate
$4.09 $4.01 -2.0%
Quarterly Leasing Activity
3.5 msf 2.9 msf -0.6 msf
Available Sublease Space
9.1 msf 10.4 msf +1.3 msf
Due to continued economic uncertainty,
expect some tenants without near-term
lease expirations to take a “wait-and-
see” approach before transacting
Leasing activity will remain lower than
pre-pandemic levels due to increasing
economic uncertainty and occupier
focus on controlling costs
With rising interest rates, more office
property distress is expected in 2023 as
many owners find themselves
underwater on their properties
Office-using job growth y-o-y Office-using job growth y-o-y (%)
Non-farm job growth y-o-y (%)
Average asking rental rate
Class A average asking rental rate Class A availability rate (%)
Total availability rate (%)
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5. 0%
10. 0%
15 .0%
20 . 0 %
-150
-100
-50
0
50
100
15 0
20 1 8 20 19 20 2 0 20 2 1 20 2 2 20 2 3
Number of jobs (thousands)
0.0%
5. 0%
10. 0%
15 .0%
20 . 0 %
25 . 0%
30 .0 %
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3
0.0
1.0
2. 0
3. 0
4.0
5. 0
6. 0
20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3
Square feet (millions)
5-year quarterly average
Office market braces for more property distress in
2023 as underlying fundamentals remain soft
savills.us
Savills Los Angeles
777 S. Figueroa Street
30th Floor
Los Angeles, CA 90017
+1 213 553 3800
Los Angeles Q1 2023 - Office
For more information,
please contact us:
Savills West Los Angeles
West Los Angeles
1100 Glendon Avenue
Suite 1800
Los Angeles, CA 90024
+1 310 444 1000
Joshua D. Gorin
President,
Los Angeles Region
jgorin@savills.us
Michael Soto
Senior Director,
Head of Office Research
+1 213 553 3833
msoto@savills.us
Availability Rate Comparison (%)
LOS ANGELES SUBMARKETS
Rental Rate Comparison ($/sf)
LOS ANGELES SUBMARKETS
Top Transactions
Source: Savills Research
*Trophy Building
**Sublease
Unless otherwise noted, all rents quoted throughout this report
are average asking gross (full service) rents per square foot.
Statistics are calculated using both direct and sublease
information. Current and historical availability and rent data are
subject to change due to changes in inventory.
The information in this report is obtained from sources deemed
reliable, but no representation is made as to the accuracy thereof.
Unless otherwise noted, source for data is Savills Research.
Copyright © 2023 Savills
$2.35
$2.50
$2.57
$2.69
$2.72
$2.87
$2.90
$3.10
$3.24
$3.43
$3.67
$3.76
$3.83
$3.84
$3.98
$4.11
$4.75
$4.82
$5.00
$5.36
$5.54
$5.76
$5.81
$6.04
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00
Mid-Wilshire
West San Fernando Valley
San Gabriel Valley
Long Beach
Santa Clarita Valley
South Bay
Central San Fernando Valley
Park Mile
Glendale
Pasadena
N. Hwd / St . Cit y /U ni v C i ty
Downtown LA
Los Angeles Overall
El Segundo
Burba nk
Miracle Mile
Ho ll ywo o d
Culver City
Westwood/West LA
Marina/Playa Vista
West Hollywood
Beverly H ills
Santa Monica
Century City
41.1%
34.4%
32.6%
30.5%
30.1%
29.9%
29.4%
29.3%
29.0%
27.4%
27.2%
26.5%
26.4%
26.2%
25.8%
24.9%
23.7%
22.8%
20.3%
20.2%
19.8%
19.1%
14.6%
14.2%
0.0% 10. 0% 20 . 0 % 30 .0 % 40.0% 50 .0%
Park Mile
Marina/Playa Vista
El Segundo
Miracle Mile
Culver City
Downtown LA
Pasadena
Glendale
Mid-Wilshire
Westwood/West LA
N. Hwd / St . Cit y /U ni v C i ty
Ho ll ywo o d
West San Fernando Valley
Los Angeles Overall
South Bay
Santa Monica
Long Beach
West Hollywood
Central San Fernando Valley
Beverly H ills
Burba nk
Santa Clarita Valley
Century City
San Gabriel Valley
TENANT INDUSTRY SUBMARKET ADDRESS SIZE (SF) TRANSACTION TYPE
Sony Pictures Animation TAMI Miracle Mile 5750 Wilshire Boulevard 225,239 Relocation
County of Los Angeles Government Glendale 611 N Brand Boulevard 82,723 New Location
20
th
Century Studios TAMI Burbank 3333 W Empire Avenue 76,641 Renewal
Fifth Season TAMI Westwood/West LA 11355-11377 W Olympic Boulevard* 65,000 Relocation
Skadden, Arps, Slate,
Meagher & Flom LLP
Legal Services Century City 2000 Avenue of the Stars* 57,877 Relocation
VERVE Talent & Literary
Agency
Professional Services Hollywood 6555 Barton Avenue 53,647 Relocation
John Deere Manufacturing South Bay 20770-20810 Madrona Avenue 53,401 Renewal
Irell & Manella Legal Services Century City 1800 Avenue of the Stars 51,180 Lease Restructure
Unilab Pharmaceuticals
West San Fernando Valley
8407 Fallbrook Avenue 49,140 New Location
IPG Mediabrands TAMI Century City 1840 Century Park East 36,781 Expansion
Note: Rents quoted are monthly
