Large office tenants are choosing to stay where they are, and are doing so because of cost.
New data from CBRE shows that since 2012, large tenants renewed their leases 22 months early and renewed for 135,000 square feet on average, the Los Angeles Business Journal reported.
“Total cost of the renewal is usually significantly less, and tenants tend to move when the economics or physical attributes of a space no longer meet their needs,” CBRE’s research team said in a statement on the data.
CBRE tracked tenants leasing more than 75,000 square feet. Average lease terms are 101 months.
Just 11 percent of leases on the Westside are set to expire between July 2019 and July 2022, which means many firms have already re-signed for their spaces. The Westside market is one of the tightest and most expensive in Los Angeles. Asking rents there — at $4.64 per square foot — were the highest of any neighborhood in the second quarter.
Downtown L.A. will see the highest percentage of lease expirations of any L.A. neighborhood during those three years, with 37 percent of leases expiring.
Tenant-wise, law firms make up the largest percentage of large tenants with leases expiring, at 18 percent. Around 15 percent of expiring leases are creative tenants. [LABJ] – Dennis Lynch