Los Angeles is not one of the top metros for office development in the coming year, according to a new office development report from Yardi's Commercial Café. In 2018, the city expects to deliver 1.7 million square feet of competitive office space, ringing in at number 10 on the list of the top office development markets. New York, San Francisco and Washington DC top the list. The thin office development pipeline shows that L.A.'s economy is at a point of minimal growth and while several office sectors are growing, it isn't enough to expand the office development pipeline. To find out more, we sat down with Doug Ressler, senior research office at Yardi, for an interview to discuss L.A.'s office development pipeline and his expectations for the next year.

GlobeSt.com: Is it surprising that L.A. is not one of the top cities for office development in the US?
Doug Ressler: In one word No. With the unemployment rate at 4.4 percent, we believe the Los Angeles economy is at a point of minimal growth. The entertainment industry and content generators continue to provide robust employment. Mature professional service sectors are likely to add additional headcount but will not significantly expand the office market, and will choose to increase space density.

GlobeSt.com: Does the current demand support more Los Angeles office development?
Ressler: Rents are rising and landlords are cutting back on concession packages on the Westside. However, Downtown ownership
groups are supplementing their deals with more generous terms and conditions but maintaining face rents. The Los Angeles market has experienced positive net absorption, and vacancy has decreased only slightly due to the new deliveries in 2017.

GlobeSt.com: Do you expect office development to pick up in 2018 in Los Angeles? What is your outlook for office development in L.A.?
Ressler: We do not foresee office development increasing in 2018. In 2017 4.4 million square feet, a total of 23 properties that are 90% competitive, were completed. In 2018, completions are projected to be 2.7 million square feet, or a total of 12 properties that are 86%+ competitive, will be completed. That is a decrease of 40% in development activity from 2017.

GlobeSt.com: How does new development compare to redevelopment office projects in Los Angeles?
Ressler: Downtown trophy owners continue to reinvent and re-energize their assets through ambitious lobby and plaza renovations such as City National Plaza, which is developing a multi-million-dollar improvement project.

Instant Insights /

Los Angeles Falls Short on Office Development

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