L.A. Office Activity Improves, But Challenges Are Mounting

Office leasing activity in Los Angeles surpassed the five-year average for the fourth consecutive quarter, but weak demand and high vacancy rates across the city continue to delay the market’s recovery.

L.A. reported more than 3.7 million square feet of leasing activity in the second quarter of 2025, well above the 3.4 million square feet reported last quarter and the 2.8 million square feet reported a year ago, according to a new report by Savills. Three of the city’s 10 largest leases this past quarter came from financial services and insurance firms, led by Oaktree Capital Management’s 220,000-square-foot relocation to CommonWealth Partners’ City National Plaza in Downtown L.A.

Still, demand for office space — particularly among prospective media, entertainment and tech tenants — remains low. 

The lackluster demand is caused largely by uncertainty about Tinsel Town’s entertainment sector, which has seen a steady decline in activity since the pandemic and industry strikes, as companies and productions leave the region for greener (and less expensive) pastures. Production levels in Southern California were down an estimated 50 to 70 percent earlier this year compared to their pre-pandemic peak, Commercial Observer reported in March. 

Office availability across the city therefore rose to 28.1 percent, up 20 basis points from the previous quarter and 70 basis points from a year ago. General economic anxiety, on top of industry-specific concerns, is another hurdle for office-using job growth, Savills analysts say. 

Space demand from health care providers, educational institutions and some retailers (particularly due to the general strength of the retail sector lately) is expected to grow, however. Firms seeking high-quality, trophy office space, particularly in areas like Century City, also continue to drive activity. That includes Evoke Advisors, which in June inked a nearly 25,000-square-foot lease at Irvine Company’s 2121 Avenue of the Stars tower in Century City.

Asking rents for both average and Class A properties increased this past quarter, to $3.99 and $4.25 per square foot per month, respectively. Those figures represent year-over-year rent climbs of 2.3 percent and 3.7 percent, respectively, per Savills. 

Orange County’s office market, by comparison, has shown positive signs across the board. 

Overall leasing activity in the county amounted to 1.8 million square feet, a nearly 42 percent boost compared to the previous quarter and up 19.3 percent compared to the same period last year. Much of the demand lately comes out of the Airport Area submarket surrounding the John Wayne Airport in Santa Ana, such as Ventura Foods’ 60,000-square-foot relocation to Irvine Company’s Spectrum Terrace, in Irvine. The lease is more than double the firm’s previous digs in Brea.

Orange County’s overall availability rate fell to 21.4 percent this past quarter, a drop of 90 basis points over the previous quarter and down 160 basis points year-over-year, per Savills. Average asking rents increased slightly quarter-over-quarter to $2.80 per square foot per month, though were down by 3 basis points compared to the second quarter of last year. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.