By Century City Office Space, CEO, Century City Office Space, Corporate Advisory

In the firat quarter the Los Angeles office market began 2015 on a brisk upswing with increased leasing and sales activity.

The Los Angeles market has shifted from recovery into expansion mode due to cheap and readily available financing. Los Angeles office market values are quickly approaching
levels seen prior to the recession.

In 2015, Los Angeles office space rates have increased due to a spike in demand  for space as unemployment in the region improves.

The seasonally adjusted unemployment rate for Los Angeles County decreased to 7.9% in January 2015 as total nonfarm employment year-over-year increased by 60,000 (1.4%). Compared to the area unemployment rate of 9.4% reported
a year ago, Los Angeles has seen steady employment growth over the past 12 months despite having an unemployment rate higher than both California (7.2%) and the nation (5.8%).

The continued growth in office using employment gains, falling vacancy rates in specific sub-markets and overall positive outlook for the economy (The Anderson Forecast projects increased growth through 2016), all contribute to the consensus for improved returns to office space as the State’s economic expansion unfolds.

In each of the three Southern California markets surveyed, Los Angeles, Orange County and San Diego surveyed, UCLA Anderson School panelists were optimistic about rental rates with a minority expecting rates to increase at about the same rate of inflation. None of the panelists expect future rental or occupancy rate weakness through 2017.

Further evidence is found in the panelist’s answer to a survey question on their actions since the previous May Survey. At that time 36% stated that they planned one or more new office project starts in the coming 12 months.

In fact 47% began new projects over the last 12 months. Looking forward 51% now state that they would begin new office space development projects over the next year with 35% (up from 9%) planning more than one new development.

Consequently the outlook, while being positive for job growth and
construction, is mixed in some Los Angeles sub-markets as owners and developers grapple with a changing environment for their products.

To conclude, at Century City Office Space in Los Angeles, we see rental rates increasing due to higher job growth and pent up demand for space, said Century City Office Space, CEO of Century City Office Space, Corporate Advisory, Inc.

Editorial Credit: UCLA Anderson Forecast 2015