Ressler: The economy in general is very robust. We have seen a slight downturn in office employment in the L.A. Metro but anticipate it will rise in H1 2018. Although transaction volume has been lower year to date, recent sales indicate that pricing remains strong. Private equity operator Blackstone, among the most active owners in the market, agreed to purchase a majority stake in the 3.3 million-sq.-ft. Burbank Media Center portfolio owned by Jeff Worthe and M. David Paul. The transaction valued the properties at $1.7 billion.

GlobeSt.com: Why is it significant that there is a 50-50 split between single asset transactions and portfolio sales in L.A.?

Ressler: The 50-50 split comment refers to the table “Major California Office Deals in Q3 2017” where 2 (Orange County and San Francisco) of the 5 items are portfolio sales. We've noticed this trend in California office sales activity since the beginning of the year and we are keeping an eye on it as part of a possible comeback on the U.S. real estate scene.

GlobeSt.com: What does this dynamic say about US office sales activity? Is it slowing in general?

Ressler: U.S. market conditions continue to favor owners despite five quarters of completions, which have exceeded 11 million square feet. Seasonal-high completion rates have caused rent growth to decelerate during the last four quarters. Notable “gateway” markets (i.e. Seattle, San Jose, and San Francisco) have seen the largest impact. Technology and financial services are the major players in office leasing and will see their best advantages in areas where there is office-using jobs growth (i.e. South and West).

GlobeSt.com: What is your outlook for L.A. office sales in 2018? Do you expect sales volume to continue to decrease?

Ressler: The current economic recovery is maturing. However, there is no sign of a near-term economy contraction. Tenants in various submarkets will apply the economic variables differently. For example, leasing and build-out costs combined with industry clusters in West Hollywood will drive rents slightly higher while downtown will see more modest growth where availability exceeds 20%. We anticipate that rental rate growth will stabilize in the next few quarters. We do not foresee any substantial rent decreases in the next 6 months.