LA Medical Office Vacancy Rate Returns to Pre-Pandemic Levels

The office asset class has gone through a slow recovery since the onset of the pandemic and we’re seeing that trend play out in the medical component sector.

A recent report from JLL revealed mixed results for the Los Angeles outpatient medical market. Starting with some good news, the vacancy rate sat at 9.6 percent for the second quarter. That represents the lowest mark since 2019, before the pandemic hit the U.S. Plus, sublease vacancy has remained under one percent.

Antelope Valley’s total vacancy was 12 percent. That rate only trailed behind Conejo Valley (12.1 percent), Santa Clarita Valley (15 percent), and Downtown Los Angeles (23.7 percent). The Mid-Wilshire and Mid-Cities submarkets hosted the lowest vacancy rates at five percent and 5.8 percent, respectively.

Overall, in LA for the second quarter, net absorption was positive at 28,670 square feet. Westside generated the largest share of the category, with 36,411 SF. Year-to-date, net absorption totaled 34,875.

However, it wasn’t all good news, as sales continued to slump.

“Looking back on recent years, the LA market recorded $111,150,000 of sales during the first half of 2023, which was a drop in transaction volume of more than 80 percent from 1H2022,” JLL said in its report.

“Volume fell even further for the first half of 2024, with just $61,990,997 in recorded sales volume. This represents a nearly 50 percent drop from 2023’s historically low first half.”

For the U.S. as a whole, sales volume for medical outpatient buildings hit its lowest quarterly level since the beginning of 2016.

Rental rates in LA haven’t been faring well either. In the June quarter, monthly asking rents per square foot averaged out to $3.61, a three percent dip since the end of last year. Antelope Valley recorded the lowest total at $1.86. Santa Clarita Valley and San Gabriel Valley were the next lowest LA submarkets, at $2.43 and $2.67, respectively. Westside posted the highest ask at $4.63 per SF.