In the short term, the suburban Los Angeles office market suffers challenges. As of the third quarter 2001, increasing sublease availability is plaguing the suburban markets. Corporate downsizing, especially in the insurance sector, has reduced the demand for office space.
By the end of 2002, the report goes on to say, stronger demand for office space, particular in entertainment and the aerospace/defense sectors, is expected to reduced the overall vacancy rate 12 %, well below the market's historic norms.
Between the fourth quarter 2001 and 2003 6.9-million sf of new office construction is expected to come on-line in the market. This is a modest 2.1 % annual growth rate of the existing inventory. Over the same period the report cites occupied space increasing at an even greater annual rate of 2.4 %. The predicted strengthening market is expected to see overall asking rent increase by 4.1 % annually to $26.76 per sf by the end of 2003.
The report goes on to state that Los Angeles is forecast to show the strongest improvement between now and year-end 2003, second only to Washington, DC, among the top-10 CBDs expected to see the strongest growth in asking rents. Plus, Los Angeles is the only top-10 non-CBD market where rents are expected to outpace inflation through 2003.
Los Angeles office-using employment exceeded its 1990 for the first time in a decade, accounting for 856,000 jobs Los Angeles posted job-using employment growth of 2.9 % in 2000, compared to 2.7 % for the US, and is expected to keep pace with the nation through 2003.In 2000, Los Angeles gross metro product grew 4.9 %, slightly above the nation's 4.1 % GDP growth. Forecasts indicate that gross metro product growth will continue to outpace that of the US throughout 2003.
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