LOS ANGELES—Los Angeles has a small pipeline of office development compared to other major US cities. According to research from JLL, the city ranks number 18 in the amount of office space currently under development. In total, the city has 2.5 million square feet under construction, a total of 14 projects. Those projects are slated to deliver in 2017 and 2018.

“Barriers to entry are high, especially on the Westside,” Blake Searles, an EVP at JLL, tells GlobeSt.com about why the pipeline is so small compared to other markets. “The concentration of development in L.A. has been primarily focused in Playa Vista and Hollywood where the recently delivered product has been years, and in some cases, decades in the making. Not captured in the numbers are many adaptive reuse projects throughout the city that add new market supply but not considered ground up.”

While the development pipeline is small, it is actually increasing significantly. In 2015, Los Angels has 1.1 million square feet under construction and in 2016, the market had only 660,00 square feet under construction. Last year, the office market vacancy rate in Los Angeles dropped below 14% for the first time since the down turn, and most yearend office reports showed a healthy and active office market. So, do we need a bulk of new construction? “Always,” says Searles, “provided there is a thoughtfulness in how our cities grow and the highest and best use for new construction. The L.A. basin is in need of workforce housing and walkable amenities. Impact is the overpopulated freeways and roads, people have to get in our cars to do everything.”

This year, Searles says that we can expect the development pipeline to continue to grow. “Provided debt markets continue to be favorable and market demand is healthy, the pipeline will be strong and pick up momentum,” he says. “Keep an eye out for these numbers to increase considerably looking out beyond 2018.”

Instant Insights /

L.A. Lags Behind in Office Construction

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