LOS ANGELES—The L.A. office market slowed at the end of the year, and the presidential election may have caused it, according to an office report from Savills Studley. In 4Q16, deal volume fell 20.3% from the previous quarter, and leases are taking longer to complete. While the first half of 2017 will show if this was a pause or a more significant softening of the market, Andrew Lustgarten, corporate managing director of Savills Studley, says that the election spurred the end-of-year slowdown.

“Leasing activity slowed Q4 due to the election of a new and controversial president that created uncertainty among tenants,” Lustgarten tells GlobeSt.com. “In addition, 2016 was already an extremely active year with more than 10 million square feet of leasing during the 2nd and 3rd quarters. Significant large transactions that took place in prior quarters included Snapchat, ICM, Disney, Fandango, Warner Music, Oracle and Endemol.”

Entertainment and technology firms continued to fuel activity in the fourth quarter, leading leasing activity, especially for new development and conversion property. More traditional users, including law firms, banks and general professional business services, didn't account for as much activity. City National Bank's lease renewal of a two-building space at 555 S Flower Street and 350 S Grand was the largest lease in the quarter; however, the company reduced its prior space by five floors.

While activity at the end of the year fell, the overall 2016 performance was strong, even up against the tremendous performance in 2015. “2015 was the strongest year for leasing since 2001, with deal volume of 19.5 million square feet and 2016 exceeded that number at 20.4 million square feet,” says Lustgarten. “The vacancy rate in greater L.A. fell from 19.1% to 17.9% and asking rents increased from $32.56 per square foot to $37.60 per square foot in 2016. That said, there is a dichotomy between leasing activity on the Westside, which includes most of the entertainment, software and social media firms and the balance of the market. Traditional space occupiers including law firms, banks and general professional business services companies continue to proceed cautiously.”