LOS ANGELES, CA / ACCESSWIRE / January 21, 2018 /You have numerous choices, if you need office space in Los Angeles, CA. While some markets suffer from major shortages, new construction and a trend toward co-working spaces makes finding office space easier.
Leasing Data
According to Neil Shekhter, the Los Angeles office leasing market slowed down at the end of last year, thanks to sky-high rents and yet another uptick in vacancy. Cushman and Wakefield's fourth quarter report reveals that the average asking rent went up to $3.29 per square foot. That's up 3.5 percent from the prior quarter and a 9.3 percent increase since fourth quarter 2016.
While investments increased, net absorption decreased. Investment activity rose to 19.4 million square feet, a year-over-year increase of 17 percent. Net absorption fell 30 percent from fourth quarter 2016. In fourth quarter 2016, it was 2.5 million square feet, but a year later, net absorption dropped to 1.8 million square feet.
Co-working Trend
The new co-working trend may provide another reason the Los Angeles office leasing market slowed down at the end of last year. Many companies see the benefit of sharing space with other, unrelated businesses. Not only do they save money, they spawn new ideas. With co-working spaces, many companies share the same office space. Employees from various firms mix and the interactions between divergent industries fosters innovation, Entrepreneur reported in its July/August 2017 issue.
So many companies turned to co-working in the Los Angeles metro that they led the list of major officing leases in fourth quarter 2017. The co-working firm, Spaces, garnered two of the 11 largest leases - one for 50,100 square feet in Downtown's Paul Hastings Tower and one for 60,000 square feet in Hollywood, Neil Shekhter points out.
New Construction
Vacancy rates increased because new construction coupled with renovations increased available space. Those two combined created more than 3 million square feet during 2017. The vacancy rate increased to 15.1 percent from 14 percent in 2016. You'll continue to find an overabundance of office space since there are another 4.8 million square feet of new space planned in the coming two years. A Cushman and Wakefield representative stated that the only thing he foresaw driving down that vacancy rate is out-of-state or out-of-market tenants, says Neil Shekhter.
New, Newsworthy Leases
Neil Shekhter explained, that despite the co-working trend and rise in vacancies, a few significant single source leases did get inked in 2017. The firm WeWork leased 60,000-square feet of space at One Culver. Apple leased an 85,000 square feet space at Hackman Capital Partners’ La Cienega building on W. Jefferson Boulevard.
Total lease space amounted to approximately 12 million square feet in 2017. That's down 15 percent last year's 14 million square feet of leased space. About one-third of that occurred on the LA's westside.
While cost per square foot rose slightly since last year, the amount of available space increased remarkably. Renovation and new construction planned for the next two years will continue to increase availability. Add to that the new trend in co-working and it suddenly became easy to find office space in LA. If you're a real estate agent though, you may find it tough to lease out all of your listings thanks to sky-high rents and yet another uptick in vacancy.
Launching NMS Properties in 1988, Neil Shekhter assumed the role of CEO in January 1995. The real estate management company focuses on multi-family and mixed-use properties in the Greater Los Angeles area and in Santa Monica. At present, NMS properties manages more than 70 properties.
Neil Shekhter - Founder and CEO of NMS Properties
Apartments For Rent In Los Angeles NMS Residential: http://www.nmsresidential.com
NMS Properties - Real Estate Management Firm: http://www.nmsproperties.com
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SOURCE: NMS Properties, Inc.