Los Angeles Tops Office Development Nationwide With 6.9M SF on Deck
Another 6.9 million square feet of office space will come online in Los Angeles this year, making it the most active market in the country for 2021.
Data from Yardi Matrix shows a total of about 8.9 million square feet of office under construction in L.A., with about 78 percent projected to be added before the end of this year.
L.A.’s Westside, which has been the most active submarket for a decade, will maintain that position, with about 63 percent of the pipeline slated for that area.
The redevelopment of the Broadway Trade Center at 801 South Broadway in Downtown L.A. is the largest building under construction in the market. It is also the sixth-largest office development project set to be completed this year in the country.
Boston and San Francisco, the next two most-active markets on the list, are set to deliver 6.6 million square feet and 5.7 million square feet of office this year, respectively. Manhattan ranks sixth with 4.1 million square feet of expected office deliveries, and the broader New York City market outmatches L.A.’s.
It may not be the best time to be first, or anywhere at all, on the list. Office leasing activity was fractional during the pandemic, and now more companies are reconsidering their office needs, and a growing number of employers say they are making work-from-home a permanent part of their strategy.
Office sublease availability — which is typically an indicator of the state of the office market — grew significantly in L.A. when the pandemic hit, and continued to rise 15 percent in the final part of 2020, up to over 6.5 million square feet of sublease vacancy, according to JLL. Further, the pandemic drove more workers away from urban centers like L.A. and into more suburban areas like the Inland Empire.
L.A.’s persistent growth as a hub for tech, media and entertainment companies sets it apart from the others. Leasing activity has started to increase compared last year, and investment in creative office projects leased to premier tenants continues to flow, setting L.A. on its path to recovery.
For example, earlier this month, Google said it is investing $7 billion in data centers and office space this year, including more than $1 billion in California. Construction is currently underway for the tech giant’s massive, new office development by Hudson Pacific Properties on L.A.’s Westside. Hackman Capital Partners is also set to open its creative office redevelopment in El Segundo this fall, after plant-based food company Beyond Meat signed a 280,000-square-foot lease for the property at the start of the year.