With 2020 in the rearview mirror, the official tally on the Los Angeles office market showed major declines in nearly every category.
That includes leasing, which experienced one of the slowest years in at least two decades, according to Savills.
There was just 10 million square feet of office space leased in all of 2020, down from 18 million square feet in 2019, Savills noted in its fourth quarter office market report. That amounted to a 44 percent drop in leases, as companies either exited deals entirely or trimmed space.
Inventory increased by 1 million square feet to 214.8 million square feet in L.A., and total availability increased to a 10-year high of 22.5 percent.
The fourth quarter saw just 2.1 million square feet of office space leased compared to 3.8 million square feet in Q4 2019, according to Savills.
The completion of new Class A space helped push average monthly asking rents up to $3.74 in Q4 2020, compared to from $3.51 in Q4 2019. But Savills warned that this metric “does not truly reflect current dynamics.”
“Asking rents will decline as tenants have an abundance of options and landlords will need to offer generous concessions to attract or keep occupiers in this environment,” the report noted.
Three out of the five biggest leases signed last year were renewals, according to a Real Deal analysis, including the largest — the Walt Disney Company’s renewal of 425,000 square feet at Blackstone and Worthe Real Estate Group’s 3800 Alameda in Burbank.
Netflix signed the largest lease for new space in the fall, for 171,000 square feet at Burbank Empire Center.
Burbank and Century City were the two tightest markets in the L.A. area in 2020. Century City is popular with finance-related companies, which took part in 31.5 percent of major transactions in terms of square footage.
Century City is historically one of the priciest markets in L.A., and that didn’t change last year. With an average asking monthly rent of $6.01 per square foot, it was the most expensive.
The pandemic also hit into office investment sales last year. Silverstein Properties made the biggest purchase of the year when it paid $430 million for the U.S. Bank Tower in Downtown L.A. But that property was valued at $633 million before the pandemic hit.