United States: Los Angeles office market - 2025
Vacancy remains at record highs. Downtown continues to struggle with vacancy rates exceeding 20% while the desirable Century City submarket sits at 12.3% direct vacancy.
Employment Stabilizing
Los Angeles labor market is navigating a period of stabilization, with the seasonally adjusted unemployment rate falling to 5.6% even as total nonfarm payrolls experienced a slight annual decline of 6,700 jobs. Gains in health care and social assistance, which added 45K positions over the year, were largely offset by steep contractions in professional and business services and manufacturing. While traditional knowledge sector and creative industries have faced headwinds from high interest rates and trade policy uncertainty, local officials anticipate a multi-year labor surge in the construction sector as rebuilding efforts from the January 2025 wildfires are projected to generate up to 200K jobs in the coming years.
Vacancy remains at record highs
Vacancy remains at record highs - although a significant divide in performance remains between the West side and the rest of the market. Downtown continues to struggle with vacancy rates exceeding 20% while the desirable Century City submarket sits at 12.3% direct vacancy.
Slight Pricing Recovery in Capital Markets
While broader transaction totals remain suppressed, the LA office market has seen a slight pricing recovery to $330 per square foot, up from the 2024 trough of $325 per square foot. This modest upward trend is increasingly supported by owner-occupiers, who have boosted their market share in 2025. Conversely, multi-tenant properties continue to face a steep "pricing reset," with private buyers frequently securing assets at 35% to 70% discounts relative to pre-2020 values to offset the risks of record-high CMBS delinquencies and persistent vacancy. Moving forward, the market is expected to remain price-sensitive as lenders maintain strict financing requirements, forcing a continued reliance on well-capitalized private equity and users rather than institutional REITs.