West L.A. Gains Momentum Going Into Year-End
Vacancy in the West Los Angeles market dropped by 30 basis points as demand outweighed the delivery of three properties to the market. Rents continued their ascent, rising by $0.09 to $4.55 PSF FSG. Leasing activity showed continued stability, recording 1,031,100 SF, the fourteenth consecutive quarter of velocity in excess of one million.
The West Los Angeles market is poised to add just under 1.6 million SF in the near future as construction and creative conversions deliver. Leasing efforts for these projects will go a long way in determining whether vacancy stabilizes in the West Los Angeles market or continues to rise.
The average asking monthly rent for West Los Angeles rose to $4.55 per square foot (PSF) full service gross (FSG), a 6.3% increase year-over-year.
Demand continued to rebound by recording 692,200 square feet (SF) of positive absorption due partially to gains in Santa Monica and Culver City.
The under-construction pipeline held steady, adding three more properties while three properties delivered; the total number of buildings in the pipeline is fifteen.
Blackstone was once again an active seller, disposing of two properties and bringing its 2017 year-to-date total to five.
Leasing activity recorded 1,031,100 SF, down 23.9% year-over-year.
The West Los Angeles market continued to ascend in the third quarter of 2017. Vacancy, as expected, stabilized and leasing velocity remained brisk for the quarter. As such, landlords in some supply-constrained markets are expected to continue pushing rental rates, although not quite at the rate of previous quarters. The construction pipeline remains full, so how much of the space will remain speculative at delivery bears watching as the year progresses.