The office vacancy rate in Los Angeles continues to rise, setting another historic high at 24.2% at the end of the first quarter, with an overall availability rate of nearly 30%.
Negative net absorption plummeted to minus 1,084,423 square feet due to persistent soft tenant demand. At the same time, average direct asking rates remained flat at $3.99 full-service gross (FSG), according to CBRE’s latest office market report for Greater Los Angeles (GLA).
The overall vacancy rate in the 33M-square-foot Downtown Los Angeles submarket topped 31%, with overall availability hitting 33.6% at the end of the first quarter.
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Total leasing volume ticked down to 3.5M square feet, with new deals accounting for 58% of the total amount signed in Q1.
Despite being the largest contributor to negative absorption, with a first-quarter total of minus 563K square feet, the West Los Angeles submarket inked more than a quarter of the deals in Greater Los Angeles and posted the highest average asking rent for Class A space, at $5.56 FSG.
Investment sales dropped to $550M in Q1, including 26 sales above 10K square feet in size, a 36% reduction in volume and a 35% drop in deal count quarter-over-quarter. The most lucrative sale in the first quarter was a 223K square foot property in Calabasas that fetched $69.4M, or about $312 per square foot.
There were no new office deliveries or construction starts in Greater LA in the first quarter, a reflection of muted developer confidence in office demand and challenging financing conditions, CBRE reported.
According to data from return-to-office tracker Kastle Systems, the city has consistently lagged the national RTO average with less than 50% of the metro’s pre-pandemic average. Kastle’s numbers, based on entry card swipes, show that return-to-office attendance in L.A. peaked in 2023 at 47.1% and then dropped to 46.1% in 2024.
Placer.ai, which uses cell phone data to compile its RTO metrics, reported a return-to-office rate of 49% for Greater LA in January 2025, while the national rate for the same period was about 60%.
L.A.’s lagging RTO numbers likely will get a boost in July, when Gov. Gavin Newsom’s executive order goes into effect, mandating that all state agencies and departments that continue to offer remote work require a minimum of four in-person days per work week.
When the governor issued the order last month, his office estimated that about 95,000 state employees continued to work remotely or in a hybrid capacity.
Meanwhile, legal challenges to Newsom’s RTO mandate from unions representing state workers are ongoing, CalMatters reported. An arbitration decision last year involving CASE, the union representing state attorneys, bolstered California’s authority to compel employees back to in-person work, but the union is appealing the decision.
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