Office Space News
Los Angeles Office Space Market Goes South
Published July 23rd, 2010 by Jennifer LeClaire
Call it a soft market. Office space in Southern California is taking a big occupancy hit, even with rental rates sliding to bargain basement prices. It seems few tenants want to commit to a long-term deal, leaving the door of opportunity wide open for serviced office space providers.
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The vacancy rates in Los Angeles, San Bernardino, Riverside and Orange Counties swelled to 20 percent. That compares to 17 percent a year ago. Meanwhile, average rental rates dropped to $2.37 a square foot compared to $2.52 a square foot a year ago, according to CB Richard Ellis. The firm expects vacancy rates will continue to rise as 2010 progresses.
Once a hot spot for growth, the Inland Empire is suffering worse than most with a vacancy rate of 25 percent in the second quarter. So what does the serviced office scene look like in this high vacancy area? Premier Business Centers is located in the Inland Empire. There’s also a competitor there called Empire Executive Suites. The market is deeper in Los Angeles. Here’s a list of the major players in the Los Angeles area:
- Corporate Office Centers
- Barrister Executive Suites
- Regus
- HQ
- Synergy Workplaces
- E Office Suites
- Hope Business Center
- Regent Business Centers
- Motor Avenue Executive Office Suites
- Virtuoso Business Center
- Third Street Executive Suites
- Los Angeles Corporate Center
- Park Place Executive Suites
Like Atlanta, Los Angeles is an ultra competitive market for serviced office space. At the end of the day, people are still renting office space. There may be fewer tenant candidates in Los Angeles these days, but it seems the ones who are looking for space are also looking for what serviced office facilities specialize in: turnkey business centers with short-term leases at attractive prices. It will be interesting to see which one of the executive office suites operators in Los Angeles will rise to the occasion with advertising that trumpets the industry’s benefits.
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Bill Brookshire July 23rd, 2010 at 9:57 am
Good analysis of the LA office market. With so much drama in California, including a bankrupt government, I am not surprised that the office space market has headed south. Whether or not serviced office providers can take advantage of this opportunity remains to be seen. The worst of the commercial real estate market crash hasn’t even head this way yet.
Elizabeth Sanchez July 23rd, 2010 at 10:16 am
I remember reading about the Island Empire in its hey days. They had a very strong economic development arm promoting the virtues of locating there. Interesting how they are taking some of the biggest hits now. Just goes to show you, you can have a great location and still struggle to rent office space.