Office Market Delivers Mixed Performance

LOS ANGELES-The office markets in Los Angeles County remained a patchwork quilt of different patterns during the second quarter, according to figures supplied by Grubb & Ellis, with some submarkets performing well and suburban markets posting positive absorption overall, while Downtown L.A. barely treaded water. The performances of the different submarkets varied so much that hardly any single, discernible trend can be cited that describes the overall performance of the L.A. County office market in the second quarter.One of the highlights of the second quarter was the performance of the county’s suburban office markets. Thanks to their solid results, the county overall absorbed 535,123 sf to reach a total of nearly 1.3 million sf of absorption year-to-date. The figure surpasses the year-to-date office market absorption at this time last year, which was 1.1 million sf. The positive absorption occurred mainly in the suburban markets, Grubb & Ellis notes, with Downtown L.A. posting negative absorption of more than 50,000 sf during the quarter. The county’s office markets also improved overall in terms of vacancy, which declined by half a percentage point from one year ago to stand at 15.7% at the end of the quarter. That figure was also down from the first quarter, when it was 16.1%. Asking rents in the county barely budged, moving up or down a penny or so compared with the previous quarter and the previous year.Among the best-performing submarkets was Los Angeles North, which has registered six straight quarters of positive net absorption. Year-to-date, the North submarket has absorbed 709,799 sf of office space and enjoys a 10% vacancy/ L.A. North is the tightest office market in the region, although rents there are also down from a year ago, standing at $2.14 per sf per month gross, down about four cents from a year ago. Grubb & Elllis attributed the Downtown L.A. negative net absorption of to tenant consolidation, which increased the Downtown vacancy rate to more than 20%.