Downtown Vacancies Hit 10-Year Low

LOS ANGELES-Downtown’s office vacancy factor has dropped to its lowest level in a decade, a new report by Cushman & Wakefield says, as more tenants flock to the market to take advantage of some of the Southland’s lowest rental rates.

The Central Business District’s third-quarter vacancy rate of 15.8% was down from 17% at mid-year and more than 20% in the third quarter of 2000, according to the C&W report. Net absorption hit 300,000 sf. “I have never seen the Downtown market as fundamentally strong as it is now,” sums up John Eichler, director of real estate services for Cushman & Wakefield’s LA office.

Some other big Southland office markets suffered. C&W reports that the vacancy factor on the tech-heavy Westside jumped to 13.1% in the third quarter from 10.7%, as many dot-coms and other technology companies continued to give up space. Compounding problems, the report says, is that another 2 million sf of Westside space is under construction—compared to virtually zero in Downtown.

Failing technology tenants and new office projects pushed the vacancy rate higher in neighboring Orange County too, C&W says. Its third-quarter vacancy factor was 16.9%, up a full two percentage points from the previous three months.