Pipeline of future move-ins will push LA Westside vacancy even lower
The current Westside direct vacancy rate sits at 10.1 percent, a historically low level not seen since the previous cycle in 2009
August 07, 2019
- The current Westside direct vacancy rate sits at 10.1 percent, a historically low level not seen since the previous cycle in 2009. Numerous factors have contributed to the tightening of the market, namely the emergence of the new media industry and the explosion of tenant interest by large technology firms migrating into the market. These companies are tapping into the deep talent pool and entertainment infrastructure Los Angeles has to offer.
- Significant leasing activity has taken place in the previous 8 quarters, and the possibility of more looms as tenants establish themselves and work through future growth options. Much of the leasing activity has been focused in tech and media rich pockets like Culver City and Playa Vista, however the surrounding micro-markets have also benefited by capturing those displaced or priced out of their current locations.
- The current pipeline of future absorption totals almost 2.5 million square feet. This includes move-ins from tenants like Nike, LiveNation, Facebook, HBO and Google have inked leases for significant blocks of space. While some of these deals were signed in new development projects which are still in the construction phase, others will be moving into some of the few existing large blocks of space in the market.
- If this trend persists, Westside vacancy could dip into single digit territory. While the current construction pipeline remains measured, the tight market conditions may prompt future development in an attempt to keep pace with demand. Additionally, users may continue to look outside of traditional markets to emerging pockets like West Adams, as has already been the case for tenants like Sweet Green, RealReal and Goat Group.
Source: JLL Research