Introduction
Los Angeles, CA, offers extensive commercial real estate opportunities with its vast population, economic growth, and diverse landscape. The city’s significant CRE inventory spans numerous cities and regions, making it a prime destination for investors and tenants.
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The State of Los Angeles Commercial Real Estate
Los Angeles is an attractive destination for commercial real estate investors and business tenants. The region encompasses multiple submarkets catering to diverse industries and business needs. From downtown’s bustling core to Silicon Beach’s thriving tech scene, businesses can find suitable spaces for their specific requirements. Whether it’s a state-of-the-art office space or an industrial facility near the Port of Los Angeles, the opportunities are abundant, positioning Los Angeles as a prime destination for business growth and investment.
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Los Angeles Regional Breakdown
- Population: Nearly 4 million in the city, with just under 13 million in the metropolitan area.
- Growth: Population increased by 0.01% since 2010.
- Area: Los Angeles County is the most populous in the US, covering 4,084 square miles.
- Key Cities: LA, Long Beach, Santa Clarita, Glendale, and Lancaster.
- Income: Per capita income is $40,569, and median household income is $82,503.
- Education: About 80% are high school graduates or higher, and over 37% hold a bachelor’s or postgraduate degree.
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Los Angeles Job Market
Los Angeles boasts a diverse and thriving economy, driven by various industries, including entertainment, international trade, technology, aerospace, and tourism. The strategic location on the Pacific Rim enhances its economic connections with Asia and Latin America.
- GDP: Over $1.12 trillion, the 2nd largest in the US.
- Unemployment Rate: 4.8% as of May 2023 (BLS).
- Major Industries: Aerospace, biosciences, entertainment, trade, EV and advanced transportation, ocean economy, fashion, tourism, and IT.
- Top Employers: County of Los Angeles, Los Angeles Unified School District, City of Los Angeles, UCLA, Federal Government, Kaiser Permanente, and State of California.
- Major Colleges: USC, Pepperdine University, Chapman University, and CSU-Long Beach.
The region’s transportation network spans thousands of miles of highways, including I-5, I-10, I-110, and I-405. Major metros, including San Diego, San Francisco, Las Vegas, and Tijuana, are all within a 1-day drive of LA. Los Angeles International Airport (LAX) serves as a significant global hub, while smaller airports like Hollywood Burbank Airport (BUR) and Long Beach Airport (LGB) provide additional connectivity. The Port of Los Angeles, one of the busiest seaports in the US, plays a crucial role in international trade.
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Los Angeles Industrial Market
The Greater Los Angeles industrial market shows healthy occupancy and vacancy rates but is experiencing a softening in leasing demand. Factors include decreased port volumes, recession risks, and inflation impacting consumer spending habits.
- Inventory: 746,177,636 SF
- Vacancy Rate: 3.6%
- Absorption: -1,157,817 SF
- Key Leases: Furniture of America (472,876 SF), NRL/Platinum (312,212 SF), Weida Freight Systems (274,474 SF)
- Largest Submarkets: Central, South Bay, San Gabriel Valley
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Los Angeles Office Market
The Greater Los Angeles office market faces challenges, with workforce contraction, loan defaults, and rising vacancies. Despite these challenges, the demand for sound stage space offers some optimism.
- Inventory: 213,115,667 SF
- Vacancy Rate: 22.5%
- Absorption: -449,690 SF
- Key Leases: Sony Corporation (225,539 SF), Ares Management (206,000 SF), San Gabriel Regional Center (100,000 SF)
- New Construction: 3,385,341 SF
- Largest Submarkets: LA West, LA South, LA North, Downtown CBD
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Los Angeles Retail Market
The retail market in Los Angeles is adjusting to an uptick in vacancy rates and an increase in average asking lease rates. Construction activity has nearly doubled, indicating a substantial volume of space in the pipeline.
- Inventory: 859,423,940 SF
- Vacancy Rate: 6.0%
- Absorption: -1,146,630 SF
- New Construction: 2,591,925 SF
- Largest Submarkets: Northwest, South, West
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Los Angeles Multifamily Market
The multifamily market in Los Angeles is experiencing rising vacancy rates and rents following the lifting of pandemic-era eviction protections. There has been a decrease in completed construction, reflecting a market in flux.
- Total Inventory: 1,175,594 units
- Vacancy Rate: 4.2%
- Average Asking Rent: $2,156
- Recent Sales: Angelene Apartments ($112.5 million), Westside Villas Apartments ($66.1 million), Haven Warner Center ($54 million)
- Top Submarkets: West, North, Central
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Conclusion
The Los Angeles commercial real estate market offers diverse opportunities across various sectors. Investors and businesses can capitalize on the region’s robust economic landscape and strategic location.
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