Los Angeles office construction is experiencing a late-cycle spike. According to a recent report from NAI Capital, the office construction pipeline hit a record of 7 million square feet at the end of the second quarter—a record level not seen since the 1990s. Declining vacancy rates and rising rents as well as local incentives is spurring the new development activity.

“It is late in the cycle, but capital doesn’t seem to be scared of that at all. Developers are opportunity driven,” Joe Faulkner, executive managing director at NAI Capital, tells GlobeSt.com. “The city put together a transit-oriented development model, and that is spurring a lot of new growth because developers are getting a lot of benefits, like reduced parking.”

The new development is targeted to Los Angeles’ most popular office markets, like the Westside, Culver City, Hollywood and the Tri-Cities markets. While Los Angeles has an overall office vacancy rate of 10.2%, it can be significantly lower in some of these popular office markets. “The markets that are seeing the construction boom are out of options. They are full,” says Faulkner. “El Segundo, for example, has become a creative hub overflow for West L.A.”