West Los Angeles Rents Continue Upward Push
The West Los Angeles market saw rising rental rates highlighted by increases year-over-year of at least 6.7% for both Class A and the overall market. However, vacancy levels remained flat for the third straight quarter at 12.1%. Absorption gains were concentrated in the Marina Del Rey/Venice, West Hollywood and Century City submarkets. Leasing activity, while slightly lower than what the market has seen as of late, still surpassed 1.0 million SF.
The West Los Angeles market is poised to add just under 1.2 million SF in the near future as construction and creative conversions deliver. For companies looking to expand or relocate into more modern properties, these new deliveries will be highly sought after. What remains to be seen is how many companies fall into that category in order to occupy new supply.
The average asking monthly rent for West Los Angeles continued increasing at a torrid pace, recording at $4.28 Full Service Gross (FSG) per square foot (PSF), a 7.0% increase year-over-year.
Absorption gains were again minimal for the market mirroring the previous 2 quarters in 2016. Totaling just 33,000 SF in positive absorption, vacancy remained unchanged at 12.1%.
Investment sales witnessed a flurry of activity during second quarter with just under 2.0 million SF trading hands.
Leasing activity recorded 1,277,800 SF and outperformed the average for the last 10 quarters by 9%.
West Hollywood and Marina Del Rey/Venice saw the largest drops in vacancy, recording deltas of -420 and -260 basis points respectively.
Although market activity slowed, the outlook for the West Los Angeles market is positive. It remains the premier market for high-image media, entertainment and tech companies. Rental rates are expected to increase as newer product comes to market, while Santa Monica landlords demonstrate confidence in fundamentals by not getting aggressive with asking rents despite the large blocks of space available.