The report forecasts that LA's office vacancy rate will stand at about 11.7% in mid-2003, down from today's 12.2%. Importantly, Delta's figures take into account the amount of sublet space that is available now and will likely become available over the next two years.
"Without the sublet space, we're probably looking at a vacancy factor of just 10% to 11% in the summer of 2003," Tong Saetia, a Delta Associates VP and research director for its Western Region, tells GlobeSt.com. "That's a pretty healthy figure."
Delta Associates is the research arm of Chicago-based property-management giant Transwestern Commercial Services. Transwestern manages more than 100 million sf of commercial space across the US, including more than 20 million sf in California.
LA County currently has an inventory of about 302.5 million sf of office space, Saetia says. But only 8.2 million sf is currently in the development pipeline, he adds, "so there's really no threat of overbuilding."
Saetia says the region's economy is slowing, but not as dramatically as the US economy as a whole. "LA's economic base is extremely diversified, and it does not have the same high level of exposure to the shrinking high-tech sector that some other big cities have," Saetia adds.
Office rents in LA should rise at a clip that's slightly better than the overall inflation rate over the next two years, he adds, as the supply-and-demand ratio improves.
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