Los Angeles Office Market
Total vacancy, which has hovered around the 24-25% range over the two years, settled at 25.1%. Owner-user sales and conversions are tempering the average. Sublet availability dropped by 358,452 SF during the fourth quarter, resulting in the lowest amount of space in the market since 2020. Traditional industries (e.g., law and finance firms) comprise the bulk of today’s leasing activity. Most are rightsizing, with Fortune-tier companies pursuing trophy space. Industry restructuring is ongoing for media and tech, leading to sluggish leasing. Lease term lengths are increasing amid flat office utilization, suggesting most companies have a grasp on their long-term space needs. Trophy product continues to outperform, with a 13.6% vacancy.
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Los Angeles Industrial Market
Overall leasing volume declined sharply in the fourth quarter following growth earlier in the year. While mixed economic signals will moderate leasing activity into 2026, many tenants will continue to lock in plateauing rents. Class A product was increasingly pursued in 2025. 687 KSF in net absorption gains occurred this quarter while vacancy (4.3%) was flat for the third consecutive quarter. Annual net absorption (2.5 MSF) was positive for the first time since 2022. Available sublease space rose 7.1% from last quarter to reach 9.9 MSF. Infill contract rents for facilities with 24’+ clear heights fell 31.1% from 11 quarters ago, a moderate decline given the 103.0% rent growth from early 2021 to late 2022. Concessions, meanwhile, are substantially up. Lease term lengths are gradually rising as tenants lock in favorable conditions.
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