Los AngelesOffice investment sales volumes have plummeted after strong activity in the end of 2017. Los Angeles office investment activity fell 20% in the first quarter of 2018 with 21 closings in the first three months of the year totaling $1.3 billion, according to research from Yardi’s Commercial Café. While investment volumes were down, there were still some significant transactions, with the largest as the sale of the Wedbush Center in February for $196 million.

“Metro Los Angeles has been very dependent on the tech and entertainment industries,” Doug Ressler, a senior researcher at Commercial Café, tells GlobeSt.com. “When development or leasing diminishes in these two industries there is a dampening effect for the market in general. We believe it is more dependent on the submarkets specifically. For example, areas in Hollywood that have previously shown significant leasing activity are down. We anticipate that in those submarkets, which have been hardest hit owners will be more aggressive in concession packages and positive results will be seen in H2 2018.”

The slowdown in investment activity the first quarter of the year may be driven by the slowed leasing activity at the end of 2017. Office investors are reacting now to the decline in leasing demand, and this may be the beginning of an anemic office market in 2018. “Leasing volume in 2017 for Los Angeles ended short of 2016. Leasing exceeded a quarterly 4.5 million square feet versus 3.5 million square feet in 2017,” says Ressler. “Q1 2018 came in at 2.9 million square feet, with significant impact being made by the co-working industry.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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