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Report: Hard Year Ahead for Office Market

LOS ANGELES-Mounting job losses and the growing stockpile of available space threaten to make this a challenging year for the local office market, according to a report issued by the Marcus & Millichap Real Estate Investment Brokerage.

By Peter Landau | Updated on May 06, 2002

LOS ANGELES-The national economy may be starting a gradually upturn, but the local Los Angeles economy is not expected to enjoy the trickle-down effects of this growth until late 2002 or early 2003, according to a report issued by the Marcus & Millichap Real Estate Investment Brokerage. Factors such as loss of jobs and a growing stockpile of available space threaten to make this a challenging year for the local office market.

Economic conditions are not expected to improve significantly to offset the mounting available space in the marketplace, according to the research report. Job growth is forecast to turn negative this year, with Los Angeles County estimated to lose more than 23,000 jobs. The job base is expected to decline by 0.5% on an annual average basis this year. There is a ray of light in most economists’ forecast as job growth is expected to turn positive by 2003.

Still, the 2002 economy is predicted to remain weak as the region’s major industries slowly return to positive growth. However, developers are scheduled to add 5.1 million sf of office space in 2002, which contributes to the growing stockpile of available space. Most of the new construction was in the planning stage during the period prior to the recession, when the economy was strong. The report cites a strengthening economy, but one not robust enough to absorb over 5 million sf of new office space.

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