Sharp Drop in L.A. Office Leases Raises Concern

It has started.  As leases in L.A. County expired, they are not being renewed.  How much?  By 52%.  In the next year or so as these businesses either close or move to another State, the unemployment figures will skyrocket.  The same is happening in San Fran.  California, thanks to the policies of the Sacramento Democrats and Guv Newsom, business have taken the political message to heart—you are not wanted her.

“The brokerage found that only 1.9 million square feet of deals for new leases, renewals or lease expansions were signed in L.A. during the second quarter — the smallest amount since the Great Recession.

“You’ve got 21% unemployment, tenants are reimagining their workspace, which will result in a net negative demand, and subleases are just starting to trickle in. While those numbers may seem dramatic today, it’s just a part of what’s to come,” said Josh Gorin, Savills’ vice chairman and Los Angeles office lead.

Many of the big transactions that closed during the second quarter were in negotiation before the pandemic. Two of the largest transactions involved the Los Angeles Department of Water and Power and the Army Corps of Engineers, which each signed leases for more than 100,000 square feet downtown.

Rad that carefully—were it not for GOVERNMENT leases, it would have been a massacre for the real estate industry in L.A. County. Into all of this Newsom has made it worse by closing down the State—and promoting a $12 billion a year transfer of money from commercial and industrial properties to the State—making leases much more expensive. 

Tent of homeless person on 6th Street Bridge with Los Angeles skyline in the background. California, USA. (Photo By: Education Images/UIG via Getty Images)

Sharp Drop in Office Leases Raises Concern

By Hannah Madans, Los Angeles Business Journal,  7/13/20  

The pandemic took a huge toll on office leasing in Los Angeles County in the second quarter.

Activity plunged 52% compared to the first quarter of 2020, according to data from Savills Inc.

The brokerage found that only 1.9 million square feet of deals for new leases, renewals or lease expansions were signed in L.A. during the second quarter — the smallest amount since the Great Recession.

“You’ve got 21% unemployment, tenants are reimagining their workspace, which will result in a net negative demand, and subleases are just starting to trickle in. While those numbers may seem dramatic today, it’s just a part of what’s to come,” said Josh Gorin, Savills’ vice chairman and Los Angeles office lead.

Many of the big transactions that closed during the second quarter were in negotiation before the pandemic. Two of the largest transactions involved the Los Angeles Department of Water and Power and the Army Corps of Engineers, which each signed leases for more than 100,000 square feet downtown.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. Really??? says

    Garcetti and the Confederate Demccrats don’t have a clue.

    Does anyone remember the glut in LA. PRIOR TO 1990″s???

    The real estate market sucked for over a decade. Look at it this way. Pasadena and Orange Grove would actually have oranges again. The Tar Pits might bubble again (cann’t take a joke?).

    More importantly planning based upon water, sewer capacity, street capacity, in other words reality will limit this type of development. Of course limiting based upon reality will drive up cost because people will want to live here but “realville” limits them.

    Marxists never get it.

  2. William Hicks says

    SIMPLE ANSWER…..Convert those offices into section 8 housing for “New York” style affordable housing.

  3. Richard Wahl says

    William: Good idea. Then raise taxes again to subsidize the section 8. Humans are simply amazing. One keeps hoping for sanity, and then when the optimist thinks this is as bad as it can get, greater bizarre insanity occurs. The inmates are in charge of the asylum.

    In the long run, a rental collapse may bring down property values making living in that region more affordable.

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