There are a lot of cranes spread out over the Los Angeles area, and that could have led to a first-quarter rise in the commercial real estate’s office sector, according to a new Colliers International report.
Throughout the L.A. Basin metro area, there is currently 5.2 million square feet of offices under construction that will be delivered by the end of the year. Vacancy rose to 14.9 percent, a 40-basis-point increase from 2017’s fourth quarter. The largest vacancy jump was in the San Gabriel Valley, which jumped to 15 percent from 13.2 percent. The most-improved market was the Inland Empire, where vacancy fell from 13.4 percent to 12.5 percent.
The largest project being built this year, by Waterbridge Capital and Continental Equities, is 801 South Broadway, in Downtown Los Angeles, which is a 1.1-million-square-foot mixed-use development with about 500,000 square feet of office. In Orange County, another major project is Flight at Tustin Legacy, which is being built by Lincoln Property that will have just over 417,000 square feet of office, also part of a mixed-use development. A majority of development, just over 1.7 million square feet is in Downtown Los Angeles, followed by West Los Angeles, with 1.65 million square feet.
On the rent growth end, lease rates rose 6.4 percent year over year, hitting $3.04 per square foot area wide. The highest was in West Los Angeles, at $4.63, up $0.02, while the Inland Empire was the lowest, coming in at $1.77, dropping from $1.79 during the prior year’s period.
On a macroeconomic level, hires increased 1.5 percent year over year, with unemployment at 4.5 percent as of February, a 0.4 decrease year over year.
Meanwhile, a Cushman & Wakefield report about the Los Angeles market (download the PDF here) during the first quarter said that there were transactions representing 2.9 million square feet of office buildings, and four of those deals were in excess of $100 million. That included the $123.5 million sale of the Connexion Burbank, a 338,000-square-foot, three-building campus in that city and the $196 million sale of the 1000 Wilshire Boulevard, also called the Wedbush Center, a 476,000-square-foot tower, in Downtown Los Angeles.
Bank of America signed the largest lease, at 218,000 square feet, also downtown, followed by a 200,000 lease by NFL media near the Los Angeles International Airport.
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