Los Angeles Office Real Estate Trends: Q1 2025 Overview
Market Stabilization Indicators
Los Angeles’ office real estate market appears to have hit its low point post-pandemic, entering a period of stabilization. According to a recent report by Savills, leasing activity in the first quarter of 2025 reached 3.4 million square feet. While this figure is slightly below the previous quarter, it surpasses both last year’s 3.2 million square feet and the five-year average of 2.9 million square feet.
Leasing Activity and Rental Rates
The report highlights a noticeable uptick in lease renewals, suggesting that companies are solidifying their return-to-office strategies. Despite this progress, the average asking rent has decreased to $3.94 per square foot per month, reflecting a consistent figure compared to the same time last year. In contrast, Class A office spaces have seen a 1.7% increase, now averaging $4.20 per square foot.
Regional Market Variations
The current average asking rent in Downtown Los Angeles is 7.6% lower than the overall region’s average. In comparison, submarkets like Beverly Hills, Santa Monica, West Hollywood, and Culver City are experiencing record-high rental prices amidst a trend favoring higher-quality spaces. Century City remains the priciest area, boasting an average asking rent of $7.27 per square foot.
Office Availability Rates
Office availability across Los Angeles has slightly dipped but remains notably high at 27.9%. Downtown Los Angeles is facing an even higher availability rate of 37.7%. Conversely, Century City and Beverly Hills have lower availability, estimated at 21% and 20%, respectively. The reduction in available sublease space—down 800,000 square feet year-over-year—has contributed to this slight improvement.
Shifts in Demand Segments
The landscape of demand within the Los Angeles office market is shifting. The tech, entertainment, and media sectors, which have historically propelled the market, are not anticipated to secure significant new leases this year. Instead, Savills forecasts that healthcare, education, and retail sectors will play a key role in driving demand moving forward.
Government Leasing Activity
The County of Los Angeles has reinforced its presence in the market with three sizable renewals totaling over 191,000 square feet in the San Gabriel Valley, along with a 43,800-square-foot office expansion at J.H. Snyder’s SAG-AFTRA Plaza.
Occupancy Rates and Future Expectations
Office occupancy levels in Southern California remain below the national average, with current utilization rates reported at just 49.3% by Kastle Systems. This indicates that nearly half of the office spaces remain unoccupied on a typical weekday. With this in mind, Savills anticipates continued landlord concessions as competition among property owners intensifies. Additionally, the drop in office valuations may lead to a rise in owner-user acquisitions as companies consider the benefits of ownership over leasing.
