Los Angeles might be known for entertainment and technology, but over the past year, those industries have given way to other types of companies when it comes to taking office space.
Since last year, office absorption in L.A. has mostly been from so-called “traditional” office users like law firms and financial companies, L.A. Business First reported. The figures come from Avison Young’s mid-year outlook, which surveyed more than 250 commercial real estate professionals across the U.S.
Tech and entertainment companies signed major office leases in L.A. between 2021 and 2023, but these other firms have since started gobbling up a larger share, John Eichler, a principal at Avison Young, told L.A. Business First.
“Downtown Los Angeles continues to have significant headwinds for a number of reasons, but there has been stabilized, net positive absorption from the law firms, financial services and finance,” Eichler said. “If you’re an office owner in L.A., I think at this point you’re probably better off owning in an area or an office building that has a significant presence of traditional firms, as opposed to owning in certain areas where most of the tenant absorption is coming from the tech and entertainment industry.”
Professional services companies like law, accounting and consulting firms have doubled down on keeping their offices as companies continue to hammer out return-to-office orders and finalize what their office occupancy will look like. About 96 percent of survey respondents predict “steady or increased [office] market activity through year end,” Harry Klaff, Avison Young’s U.S. president, said.
The office vacancy rate in Los Angeles was 24.2 percent in the first quarter, according to CBRE.
Meanwhile, Los Angeles remains the coworking capital of the country, attracting companies and employees who might not want to commit to full-blown leases and their own office spaces. In the first quarter, Greater Los Angeles had 304 coworking locations, up from 292 in the previous quarter. The shared work spaces in the first quarter covered more than 6.8 million square feet across the region.
Coworking company Serendipity Labs has taken advantage of the interest, moving into a WeWork space in Costa Mesa earlier this month and planning an expansion in Orange County.
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