How Does a Slowdown in Office Impact the Market?

Will Adams is an executive managing director in the Downtown Los Angeles office of NGKF.

LOS ANGELES—Momentum in the office market may be slowing down, according to the 1Q16 report from Newmark Grubb Knight Frank, which shows that office absorption was less than 400,000 square feet in Los Angeles at the beginning of the year. By comparison, the final quarter of 2015 had 1.1 million square feet in absorption, while a year-over-year comparison is more positive, with only 260,000 square feet absorbed in 1Q15. Despite a potential slowdown in absorption and vacancy rates that still float above the previous peak levels, rental rates have remained on a steady upswing. Rates increased $0.02 in 1Q16 to an average of $3.03, significantly higher than 1Q15’s $2.75 rates and the $2.91 highs from the previous peak. Will Adams, an executive managing director in the Downtown Los Angeles office of NGKF talks about this dynamic and what to expect from the office market this year in this exclusive interview.

GlobeSt.com: Do you expect to see a slowdown in the office market this year?