Market Facts 4.6% County unemployment rate 1.3 Million SF Net absorption 13.3% Total vacancy rate $3.19 PSF Weighted FSG average asking rental rate Market Overview The year came to an end in with strong demand from tech companies expanding and signing the largest lease deals in the market. As Bay Area tech giants expand their content operations in the region, pushing to create more content for their platforms at an unheralded rate, SoCal will be the benefactor of this for the foreseeable future. During fourth quarter these content curators appeared to have turned the spigot wide open for office leasing as Netflix signed close to 700,000 square feet of new office space and Facebook signed 260,000 square feet in Playa Vista. This is especially noteworthy when you consider Amazon Studios and Spotify both signed large long-term leases earlier this year as well. As a result, office vacancy has contracted significantly in over the last few years going from as high as 18% in 2013 to now its lowest post-recession level of 13.3% fourth quarter. The market benefited overall in 2018 not only from Bay Area tech firm expansion but also from strong demand seen from healthcare and other growing global and local technology and media entertainment companies. Unemployment in is currently 4.6% for November 2018, per the latest data available from the Bureau of Labor Statistics, which is only slightly higher than this same time a year ago at 4.3%. With increased demand for office space, rents are rising. The average asking office rental rate increased 3.8% from Photo by Mott Smith the beginning of the year. That was the largest increase since 2015 when it rose 5.7%. The highest rents were found in the West LA submarket at $4.67 psf FSG, with the second highest in Downtown at $3.31 psf FSG, followed by the Tri-Cities with $3.15 psf FSG. County recorded a net absorption close to positive 1.3 million square feet fourth quarter 2018, and positive 1.8 million square feet year-to-date, due to strong demand out of LA North, West LA, and San Gabriel submarkets. The office market currently has its top five largest office developments under construction, which are all expected to be delivered in 2019 and 2020. This amounts to 2.3 million square feet out of a total 5 million square feet of overall construction activity for the market. If current demand velocity continues, this new supply should not pose a problem of being absorbed. With leasing demands from exciting millennial centric employers expanding throughout the basin, we remain bullish for 2019. is home to high paying jobs where a highly-skilled world-class talent pool abounds. We expect a continuation of current healthy econometric fundamentals over the next quarter, and perhaps through the end of the calendar year. To that end, we anticipate office leasing activity to remain relatively stable.
Market By The Numbers
Vacancy Rate Asking Rent Net Absorption Top Leases Tenant Type Address Submarket SF NETFLIX NEW 5901 W SUNSET BLVD, LOS ANGELES HOLLYWOOD 328,000 NETFLIX NETFLIX FACEBOOK FACEBOOK NEW 1355 VINE ST, HOLLYWOOD HOLLYWOOD 176,000 NEW 1375 VINE ST, HOLLYWOOD HOLLYWOOD 160,000 NEW 12105 W WATERFRONT DR, PLAYA VISTA MARINA DEL REY/VENICE 140,000 NEW 12105 W WATERFRONT DR, PLAYA VISTA MARINA DEL REY/VENICE 122,000 Top Sales Address Buyer Seller Price SF CAMPUS AT PLAYA VISTA HEITMAN LLC HINES SECURITIES, INC. $335,000,000 340,299 800 N BRAND BLVD, GLENDALE BEACON CAPITAL PARTNERS PIEDMONT OFFICE REALTY TRUST, INC $160,000,000 527,336 601 W 5TH ST, LOS ANGELES RISING REAL ESTATE PARTNERS LIONSTONE INVESTMENTS $130,083,500 285,000 GATEWAY TOWERS, TORRANCE THE RUTH GROUP THE BLACKSTONE GROUP LP $100,992,220 471,876 301 N LAKE AVE, PASADENA BARKER PACIFIC GROUP WASHINGTON CAPITAL MANAGEMENT, INC $82,000,000 227,067 P/SF $984 $303 $456 $214 $361 Top Under Construction/Renovation Address Developer SF Completion 801 S BROADWAY, LOS ANGELES WATERBRIDGE CAPTIAL LLC 936,101 Q1 2020 757 S ALAMEDA ST, LOS ANGELES ATLAS CAPITAL GROUP LLC 425,131 Q1 2019 433 S SPRING ST, LOS ANGELES RISING REALTY PARTNERS & LIONSTONE 338,889 Q1 2019 5901 W SUNSET BLVD, LOS ANGELES HUDSON PACIFIC PROPERTIES INC 327,914 Q1 2020 8830-8840 NATIONAL BLVD, CULVER CITY LOWE ENTERPRISES INVESTMENT MANAGEMENT 254,000 Q3 2019
A Growing, Multinational Presence Avison Young at a Glance Founded: 1978 Total Real Estate Professionals: 2,600 Offices: 84 Brokerage Professionals: 1,100 Property Under Management: 110 million sf Avison Young is the world s fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 2,600 real estate professionals in 84 offices, providing value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial, multi-family and hospitality properties. EDMONTON CALGARY SAN FRANCISCO OAKLAND SAN MATEO VANCOUVER LETHBRIDGE REGINA PITTSBURGH CLEVELAND DETROIT COLUMBUS SACRAMENTO MINNEAPOLIS CHICAGO (2) RENO DENVER ST. LOUIS LAS VEGAS INDIANAPOLIS PHOENIX NASHVILLE DALLAS MEMPHIS HOUSTON AUSTIN KNOXVILLE SAN ANTONIO TAMPA LOS ANGELES (4) ORANGE COUNTY SAN DIEGO WINNIPEG ORLANDO MEXICO CITY TORONTO (2) TORONTO NORTH TORONTO WEST WATERLOO REGION OTTAWA MONTREAL JACKSONVILLE WEST PALM BEACH BOCA RATON FORT LAUDERDALE MIAMI QUEBEC CITY MONCTON HALIFAX BOSTON HARTFORD FAIRFIELD/WESTCHESTER LONG ISLAND NEW YORK CITY PHILADELPHIA NEW JERSEY(2) SUBURBAN MARYLAND WASHINGTON, DC TYSONS CORNER RALEIGH-DURHAM (2) CHARLOTTE GREENVILLE CHARLESTON ATLANTA COVENTRY LONDON (2) THAMES VALLEY HAMBURG BERLIN DUESSELDORF FRANKFURT MUNICH BUCHAREST Transaction Services Consulting & Advisory Services Management Services Enterprise Solutions Contact Information - Downtown, CA 90071 Primary Contact: Ted Simpson ted.simpson@ 213.935.7430 - West 10940 Wilshire Blvd, Ste 800, CA 90024 Primary Contact: Jonathan Larsen jonathan.larsen@ 213.471.1069 - North 6711 Forest Lawn Dr, CA 90068 Primary Contact: Mark Evanoff mark.evanoff@ 323.851.6666 Regional Managing Director: Chris Cooper - Corporate, CA 90071 chris.cooper@ 213.935.7435 Orange County - Irvine 2030 Main St, Ste 150 Irvine, CA 92614 Primary Contact: Keith Kropfl keith.kropfl@ 949.757.1190 San Diego 4655 Executive Dr, Ste 325 San Diego, CA 92121 Primary Contact: Jerry Keeney jerry.keeney@ 858.201.7077 - Santa Monica 301 Arizona Ave, Ste 303 Santa Monica, CA 90401 Primary Contact: Randy Starr randy.starr@ 310.899.1800 Research Manager: Arty Maharajh, CA 90071 arty.maharajh@ 213.618.3818 2018 Avison Young Southern California, Ltd. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.