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The office market in Downtown Los Angeles in somewhat of a dichotomy. It has one of the highest vacancy rates in the Greater Los Angeles area, but rents that can rival West L.A. There are a few reasons for this. Among them are expensive pricing as a result of the redevelopment activity that creates higher proforma rents as well as the abundant confidence in the Downtown Los Angeles market. Another, however, could be the limited office ownership in the market. Much of the office stock is owned by a handful of large office owners, and they are able to keep rents up despite the vacancy longer than they might be able to if there were more competition.

“Downtown Los Angeles is dominated by a few really large landlords. Ordinarily, has the vacancy rate goes up, rents go down,” Joe Faulkner, executive managing director at NAI Capital, tells GlobeSt.com. “That is the way that it is. In New York, where you have a really robust market with lots of different owners, they are more elastic and they react to changes in vacancy quicker. Out here, we have big blocks of space that are owned by Brookfield, Kilroy and Douglas Emmett, they can kind of ignore those swings—and they do.”

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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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