Los Angeles Office Report – Winter 2020
- Feb 18, 2020
Los Angeles’ office fundamentals remained strong, boosted by the resurgence of the metro’s entertainment sector and its large talent pool. The coworking industry’s expansion continued in 2019, with more than 1 million square feet leased throughout the metro, but over the next year the trend will likely be heavily impacted by the sector’s transformation. While tech giants continue to anchor the metro, the entertainment industry is growing rapidly due to an increased focus on original content from Netflix, Amazon, Disney and Apple.
The metro gained 61,700 jobs in the 12 months ending in October, reaching a total employment pool of 4.6 million. The education and health services sector led growth with the addition of 34,600 positions, followed by the leisure and hospitality sector with 12,100 jobs. For the first time since 2009, Los Angeles’ office-using employment faced headwinds, with the information sector losing 11,500 positions, down 5.1 percent year-over-year.
In contrast to the national trends, investors focused less on value-add opportunities in Los Angeles. This translated into a 6.1 percent increase in the metro’s total transaction volume year-to-date through November compared to the same period in 2018. Following a sluggish 2018 when 1.2 million square feet came online, developers were expected to complete more than 3.5 million square feet by the end of 2019. Los Angeles’ office vacancy rate stood at 12.6 percent as of November, contracting by 200 basis points on a year-over-year basis.