There is increased optimism in the Los Angeles office real estate market, especially along the coast, where jobs are being generated at a rate faster than the national average. Experts at the Urban Land Institute expect the current expansion of employment to continue into 2016.
Here’s our good news: the seasonally adjusted unemployment rate in Los Angeles County decreased to 9.2% in December 2013 from the rate of 10.3% one year ago, notes the Employment Development Department. As a point of reference, the California seasonally adjusted unemployment rate was 8.3% in December 2013, down 9.8% from December 2012. Nationally the numbers were 6.7% in December 2013 and 7.8% the year prior.
Increased employment is benefiting the office market. Current Los Angeles market data from Loopnet indicates that the current median price is $315 per sq ft for office properties in Los Angeles. This is an increase of +2.2% compared to the prior 3 months, and an increase of +18.1% compared to last year’s prices.
Developer sentiment in the office space market is optimistic in Southern California due to the increased rate of job growth in the region and a tightening supply of office space.
In January, according to Loopnet, the average asking rental rate per sq ft/year for Office properties in Los Angeles was $24.90, representing an increase of +3.1% year-over-year. County-wide, average rental rates in Los Angeles are +0.8% higher at $23.99 per sq ft/year for Office properties currently for lease.
Nationally, the growing demand for office space, combined with an extended period which has seen little to no new office construction, resulted in the average U.S. office rent to grow 3.1% in 2013 – the first time rents have cracked the 3% annual growth mark since 2007, the peak of the market cycle.
Finally, office investors are cheering the gains in asset values seen in 2013 from a strengthening recovery in the U.S. office market, and looking forward to an even brighter 2014 as virtually all the important metrics that drive rent growth and property income are expected to continue to improve over the next 12 months.
For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – firstname.lastname@example.org or 310.392.1211, and let us move forward together.
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