By comparison, Los Angeles office investment activity has also been slow this year compared to 2017. However, Ressler says that both class-A and class-B office assets are gaining momentum. In Los Angeles, Equity Office had the top transaction of the quarter in both Los Angeles and Orange County with the $628 million sale of its 18-property Santa Monica Business Park portfolio and the $200 million sale of a 7-property portfolio in Newport Beach and Irvine. Ressler says that these top markets will continue to produce strong investor activity. “The most desirable Los Angeles submarkets continue to show they can handle the increase in prices, however price increases leaking into less stable submarkets around the region could be a concern,” he says, before cautioning; “watch for sublease space being an indicator as to potential stress on the markets.”

Next year, inflation and Fed policy are Ressler's big concerns in terms of office investment trends. “GDP growth is running above the inflationary trend and is scheduled to fall back to its longer-run rate by 2021, even as inflation is not expected to accelerate beyond the Fed's target,” he says. “With no acceleration in inflation, what impact will five additional rate hikes have? Fed policy and inflation may have a dramatic effect in the next 18 months.”