Tenants looking for office space in Los Angeles are finding themselves in a strong position. With high vacancy rates, many landlords are struggling to fill their buildings. The office rental market in the greater Los Angeles area faced a rocky start to the year, with vacancies reaching 24.2%, according to real estate brokerage CBRE. This number rises to over 29% when including "shadow" office space—leases that are signed but not occupied. This is significantly higher than what is considered a healthy market balance.
Despite the overall softness in demand, Century City stands out as an exception. The area is seeing tight occupancy and some of the highest rents in the region. Real estate broker Gary Weiss noted that Century City is thriving, particularly among law firms and entertainment companies. The neighborhood is known for its high-quality buildings and strong security, making it an attractive option for businesses looking to relocate from downtown Los Angeles, where vacancy rates are nearly 34%.
The first quarter of the year was challenging for many landlords, as economic uncertainty and recent wildfires caused hesitation among businesses. Companies were expected to return to the office, but the market was still recovering from the pandemic’s effects. The uncertainty surrounding tariffs and potential trade wars added to the confusion, making many firms cautious about making decisions.
Some larger companies, like the Los Angeles Department of Water and Power, are still in the market for significant office space. The DWP is planning to renovate its historic headquarters and needs around 300,000 square feet during the renovation. This move could provide a much-needed boost to the office market.
While Century City is flourishing, downtown Los Angeles continues to struggle. The area has seen declining property values as businesses downsize their office space. Many landlords are finding it difficult to maintain their properties and attract tenants due to financial stress.
In contrast, Century City’s office market is performing well, with vacancy rates at just 13%. Landlords are asking for rents close to $7 per square foot, significantly higher than the county average of $4.29 for good-quality office space. New developments, like the Century City Center, are nearly fully leased even before opening.
Overall, the office rental landscape in Los Angeles is mixed. While some areas face high vacancy and economic uncertainty, others like Century City are thriving, attracting tenants and maintaining high rental rates. As the market continues to adjust, it remains to be seen how the overall landscape will evolve in the coming months.