Los Angeles, California’s commercial real estate market is constantly evolving and changing, reflecting the economic and social trends of each city and region. Every year, there are new and exciting developments, transactions, and opportunities in the commercial real estate sector, as well as challenges and risks.
How We Identified the Top Commercial Property Sales in Los Angeles
We used a multitude of data sources, including public records, news articles, and industry reports, to identify some of the top commercial property sales in Los Angeles, as well as the office vacancy rates and trends in the market. Our team analyzed this data to provide a comprehensive overview of the commercial real estate landscape in Los Angeles. Whether you are looking to buy, sell, lease, or invest in commercial real estate in Los Angeles, this post will provide you with valuable insights and information to help you make informed decisions.
A major factor impacting the commercial real estate market in Los Angeles and other cities are rising interest rates and economic uncertainty. Higher interest rates increase the cost of borrowing and financing for commercial real estate transactions, as well as reduce demand and affordability for buyers and investors. Economic uncertainty can also create volatility and risk in the market, as businesses and consumers may postpone or cancel their plans to lease, buy, or sell commercial properties. Commercial real estate stakeholders closely monitor interest rate and economic trends and adjust their strategies accordingly.
Here are a few of the most significant property deals of the year so far Los Angeles:
- The sale of the Wilshire Courtyard office complex in Miracle Mile for $630 million to Onni Group, a Canadian developer that plans to convert part of the property into apartments
- The sale of the Hollywood & Highland shopping center in Hollywood for $325 million to Gaw Capital Partners and DJM, a joint venture that plans to revamp the retail and entertainment complex
- The sale of the 1.2 million-square-foot City National Plaza in downtown Los Angeles for $850 million to CommonWealth Partners, a local real estate investment firm that already owns a stake in the property
- The sale of the 1.1 million-square-foot Figueroa Centre in downtown Los Angeles for $270 million to Brookfield Properties, a global real estate company that also owns several other office buildings in the area
- The sale of the 1.8 million-square-foot Century Plaza Towers in Century City for $2.8 billion to Blackstone Group, a private equity giant that acquired the iconic office complex from J.P. Morgan Asset Management
The Latest on Los Angeles Office Vacancy Rates
One of the indicators that reflects the impact of interest rates and economic uncertainty on the commercial real estate market is the office vacancy rate. The office vacancy rate measures the percentage of office space that is unoccupied or available for lease or sale in a given market or submarket. A high office vacancy rate can signal a weak demand or oversupply of office space, while a low office vacancy rate can signal a strong demand or undersupply of office space.
Another factor that is currently impacting office vacancy rates and the commercial real estate market across the nation is the continuing impact of work-from-home. The COVID-19 pandemic has accelerated the adoption of remote and hybrid work models, which allow employees to work from home or other locations instead of commuting to a central office. This has reduced the need and demand for office space, as well as changed the preferences and expectations of tenants and landlords. Some of the trends that have emerged from the work-from-home phenomenon are the increased demand for flexible workspaces, suburban offices, and amenities that support health and wellness.
Using data from various sources such as Cushman Wakefield and Commercial Edge here are the office vacancy rates year over for Los Angeles starting in 2021:
- In Q1 2021, the office vacancy rate in Los Angeles was 14.9%, up from 12.7% in Q1 2020
- In Q1 2022, the office vacancy rate in Los Angeles was 16.4%, up from 14.9% in Q1 2021
- In Q1 2023, the office vacancy rate in Los Angeles was 21.8%, up from 16.4% in Q1 2022
Here’s a closer look at office space trends and vacancy rates in Los Angeles’ submarkets:
|Submarket||Q1 2021||Q1 2022||Q1 2023|
|Downtown Los Angeles||19.5%||20.9%||24.7%|
|West Los Angeles||14.6%||16.2%||20.9%|
|San Fernando Valley||13.7%||15.0%||19.4%|
|San Gabriel Valley||12.8%||14.0%||18.2%|
Looking Ahead: Los Angeles Commercial Real Estate Outlook
The commercial real estate market in Los Angeles has experienced some notable property sales and transactions in 2023, as well as some challenges and opportunities in terms of office vacancy rates and trends. Looking ahead, the outlook for 2023 and beyond is cautiously optimistic as the market faces some uncertainties and risks, such as the potential oversupply of office space, the changing demand for flexible workspaces, and the competition from other cities and regions.