Los Angeles Market Report Q1 2023
The office market has continued its weakening streak with another -217,000 SF of absorption bringing the trailing 12-month absorption total to -1,700,000 SF. Many large credit tenants that have a strong balance sheet to withstand a troubled market are taking this time as an opportunity to secure positions within highly sought after locations while many others are shedding space as they reduce their footprint and focus on changing labor needs. Landlords have remained hesitant to lower rental rates while focusing on offering large concession packages to get tenants in the door. In addition to leasing activity being down, landlords are starting to find themselves holding real estate where the debt is greater than market asset values with lenders starting call on loans with rates adjusting to market. Rents have decreased from $3.80 PSF to $3.79 PSF this quarter and are down from $3.84 PSF at this time last year.