Finance  ·  Leases

Los Angeles Sees Nation’s Steepest Decline in Office Prices: Report

Average sales price drops 43 percent; trade volume down 47 percent


It’s no surprise that Los Angeles’ office market is on the decline, but now we know it’s falling faster than any other major market in the United States.

Los Angeles office sale prices in 2023 have dropped 43 percent — from $412 per square foot last year to $237 per square foot through the end of May this year — for the steepest decline in the nation, according to the latest report from Commercial Edge

SEE ALSO: Dallas Diagnosis: Friendly Policies and In-Migration Draw Investor Interest

The drop in value comes despite L.A. recording the largest sales volume in the West, with $1.01 billion in closed office deals year-to-date through May. Nationally, L.A. was only outpaced by Manhattan’s $1.32 billion volume. However, L.A. has recorded 47 percent less trade volume compared to the first five months of 2022. 

The recent sale of Union Bank Plaza highlights the significant drop in values. In 2010, KBS Realty Advisors bought the building for $208 million, but this year they sold it to Westbridge Capital for only $104 million. Additionally, Commercial Observer first reported office towers including the PacMutual Building and the 62-story Aon Center are on the market at major discounts.

Further, Brookfield (BN), the largest office landlord in the city, has defaulted on more than $1 billion worth of debt tied to three office buildings downtown.

“Six months ago, we pointed to watching how lenders behaved in conjunction with borrowers,” Peter Kolaczynski, Commercial Edge’s senior manager, said. “Could they work together for an extension? Now it’s reasonable to question if borrowers will be motivated to work with lenders on a solution. We’re expecting to see more buildings surrendered.”

Nationally, office sales amounted to $11.9 billion at the end of May, which is more than 66 percent less than at this point last year. The national average sale price of an office building has also fallen from $250 per square foot in 2022 to $195 in 2023, a 22 percent decrease.

“We anticipate that there will be more distress for office properties in markets with the highest concentration of remote workers,” Commercial Edge said in the report. “Nonetheless, as the U.S. office real estate outlook indicates, well-positioned assets in these markets will continue to perform well, but older and poorly located properties will face more challenges.”

Gregory Cornfield can be reached at