West L.A. Velocity Heightens As Year Closes
- The average asking monthly rent for West Los Angeles slid slightly to $4.74 per square foot (PSF) full service gross (FSG), a $0.01 decrease from the previous quarter.
- Demand moderated compared to last quarter when Google moved into their space at the Spruce Goose Hangar. Absorption of 298,000 square feet pushed West Los Angeles's yearly total to 1.12 million square feet.
- No new projects delivered from the under-construction pipeline. A total of 13 buildings remain in the pipeline.
- Investment activity maintained momentum with two properties trading, highlighted by Heitman's acquisition of the Campus at Playa Vista.
- Leasing activity recorded 1,828,800 square feet, marking four consecutive quarters of velocity exceeding 1.1 million square feet.
Vacancy in the West Los Angeles market dropped by 30 basis points from the start of the year, as absorption gains in Marina Del Rey/Venice, Culver City and West Hollywood helped buoy the market against construction deliveries totaling 1.1 million square feet. After several quarters of rental growth above 4%, the market registered growth below 3% for the first time since late 2013. The race between new media companies for space fueled leasing activity, resulting in close to 5.8 million square feet leased by year-end.
The West Los Angeles market closed 2018 with momentum. Demand remained positive for the quarter, and vacancy fell in lockstep. Rent fundamentals retreated slightly as high-priced space options came off the market, but with many spaces opening up in the next year, rents will stabilize or climb slightly.