Southern California’s office market is clearly suffering from the economic contraction. Vacancy rates have climbed as high as 30% and some landlords have begun offering deep discounts or such perks as a year of free rent to attract tenants. What’ s worst is that the pain – according to LA Times, is expected to continue for months, if not years.
From LA Times: Vacancy in Los Angeles County reached 14.3% in the first quarter, up from 11.2% a year earlier, according to a report released last week by Cushman & Wakefield. In Orange County, where demand has been dwindling for more than a year, vacancy ticked up to nearly 18% from 15%.
Among the hardest-hit markets are the Inland Empire, Irvine and north Los Angeles County, all of which have been wracked by the losses of tenants in the troubled industries of mortgage and finance. Vacancies in all three areas have surpassed 20%, a sign of a very weak market. In Ontario and the area around Los Angeles International Airport, vacancy tops 30%.
The Westside of L.A. County, the largest office market in the Southland, remains among the most expensive for renters in the U.S. but is experiencing convulsions. The first quarter of 2009 saw the largest jump in empty space since the first quarter of 200…according to brokerage Grubb & Ellis Co.
The only bright spot from article is Downtown Los Angeles. Observers say the region’s second-largest office market has been more stable in recent years and remains that way.