In the first five months of 2024, Los Angeles’ office market continued to struggle with new supply, while the metro’s under-construction pipeline was still on a downward trend, according to the latest data from CommercialEdge.
Despite a slowdown in terms of development activity, Los Angeles kicked off 2024 with a significant office transaction and an approximately 500,000-square-foot long-term leasing agreement with Snapchat’s parent company.
As of May, Los Angeles had 2.6 million square feet of office space under construction across 14 properties, representing 0.8 percent of the existing stock—below the national average of 1.4 percent. The City of Angels’ relative to total stock under-construction pipeline was also below that of similar metros, such as Chicago’s 0.5 percent, Washington, D.C.’s 0.8 percent and Manhattan’s 1.4 percent, while Boston led the rankings with 4.9 percent.
Continuing 2023’s development trends
In terms of square footage, Los Angeles’ under-construction stock outperformed that of Chicago (1.8 million square feet), while Boston led the nation with 14.1 million square feet. Manhattan (6.7 million square feet), San Francisco (5.7 million square feet) and Washington, D.C. (3.3 million square feet) also registered large pipelines.
The top three largest office projects underway in the metro included JMB Realty’s Century City Center, the 731,250-square-foot Class A office tower rising 37 stories at 1950 S. Avenue of The Stars, scheduled to come online in early 2026.
The second largest project under construction was the 370,000-square-foot Harbor-UCLA Medical Center, an outpacient facility set to include hospital, research and support facilities in Torrance, Calif. The Class A medical office property will come online in September 2026.
Construction on the 331,000-square-foot NBC Universal Office Building in Studio City, Calif., is expected to wrap up soon, with delivery anticipated in July 2024. The 11-story office project is part of NBC Universal’s Evolution Plan, a mixed-use campus at Universal Studios that will include office, conference facilities, employee centers, screening rooms and food services facilities.
Los Angeles office prices still high
Year-to-date through May, 740,108 square feet of office space changed hands in Los Angeles for a total of $261 million, with properties trading at an average of $368.00 per square foot. Across similar markets, Washington, D.C., led with $999 million in office deals and was followed by Boston ($761 million), Manhattan ($570 million) and Chicago ($223 million).
Los Angeles was one of the priciest office markets in the nation, followed by San Francisco ($352 per square foot), Miami ($339 per square foot), Washington, D.C. ($321 per square foot) and Manhattan ($300 per square foot).
Significant deals since the start of the year include Dublin-based Flutter Entertainment’s $70.5 million acquisition of 9000 Wilshire Blvd., a 50,148-square-foot building in Beverly Hills, Calif. The property came online in 2023 and was sold in January this year by Skanska, as its first project in the metro.
Another notable office investment was the $50.3 million sale of The Annex, a 118,330-square-foot property. LaSalle Investment Management sold the two-story asset to Westside Neighborhood School, a private school.
Los Angeles office market lands large lease
In January, Snap Inc. signed a 467,000-square-foot long-term extension at Santa Monica Business Park. The 10-year commitment comprised eight buildings at the 1.2 million-square-foot creative office campus, owned by BXP.
Other leases in the metro include Kilroy Realty’s 12,000-square-foot long-term deal with tenant Com2uS at Sunset Media Center, a 22-story building in Hollywood. The Korean video and mobile game developer used the space to relocate its North American corporate headquarters.
At the end of May, the metro had 4.3 million square feet of coworking space, maintaining its position as second largest flex office hub, after Manhattan’s 8.1 million square feet. Other gateway cities with notable coworking footprints included Washington, D.C., and Chicago, with 3 million square feet each, and Boston with 2.4 million square feet.
Los Angeles’ share of coworking space as percentage of total leasable office space reached 2.2 percent—surpassing the national average of 1.8 percent.
Coworking sector attracting flex office providers
Year-to-date through May, the flex office provider with the largest coworking footprint in the metro remained Cubework, with locations totaling 1,652,712 square feet. The company was followed by WeWork (885,058 square feet), Regus (751,695 square feet), Spaces (594,193 square feet) and ReadySpaces (524,715 square feet).
In April, Industrious expanded its Los Angeles coworking footprint with two new locations. At the end of May, the company’s locations totaled 493,159 square feet.