LOS ANGELES-Mid-quarter office market analysis conducted by Voit Real Estate Services reports the “Los Angeles economy is starting to lose momentum,” leaving the commercial office market stagnant. The report shows that growth in specific submarkets, like West Los Angeles, is offset by losses in other submarkets and industry sectors, most notably government, manufacturing and trade.

“Los Angeles' economic slowdown is coming at an unfortunate time in which there's still so much ground to make up,” the report states. “Unemployment remains well above the national average and local government finances are way out of balance. Take into account the high cost of living, stagnating income levels and soaring home prices, and conditions are ripe for a mass migration out of the metro. This is the vicious cycle that has gripped Los Angeles over most of the last two decades, and it will materialize as weak economic performance over the forecast.” Although job growth between 2013-2015 is expected to average 2.1% annually, which is in line with the U.S. average, the report forecasts job growth will slow in the following years due to a trend of employers moving to more affordable metro areas.

West Los Angeles receives the bulk of growth with submarkets like Beverly Hills, Culver City and West Los Angeles experiencing rent gains of 5%, while Santa Monica continues to experience rent gains as high as 10%. “However,” the report notes, “with many non-media-focused submarkets still struggling, aggregate metro rent growth has been, and will continue to be, conservative. It will take until 2017 before rents finally regain their prior peak.”