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LOS ANGELES, CA-The 6.723 million sf of leased but empty office space in the Los Angeles basin continues to drag down the market, according to a new report by Grubb & Ellis and PNC Real Estate Finance, but the amount of sublease space in L.A. is below the national average as a percentage of overall vacant space.

The 6.723 million sf of sublease space represents 20.1% of the total available space in the L.A. market, but nationwide, the country’s 142 million sf of sublease space represents 24% of all available office space, the report says.

The amount of sublease space actually declined in the second quarter, the report says, but that doesn’t necessarily mean the office market is on its way to recovery. As the leases expire on leased but empty space over the next three years, that space will go back to landlords and add to the inventory of empty space offered on a direct basis.

The result, the report says, will be “a race over the next three years between any market recovery and the rate at which sublease space expires and returns to the market.” The researchers believe the sublease space will “delay but not reverse a market recovery.”

Most landlords are still being collecting rent for the leased but empty space in their buildings because most of the leases were signed with credit tenants, the report says.

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