- calendar_month June 4, 2024
- folder Commercial, Commercial & Investment Real Estate
The Current State of Los Angeles Commercial Real Estate Market in 2024
As we move through 2024, the commercial real estate market in Los Angeles is experiencing a mix of challenges and opportunities. Let's break down what's happening in different areas of this market.
Office Spaces: Changing Needs
The way people use office spaces in Los Angeles is changing. Many companies are still allowing employees to work from home or only come into the office part-time. This means there's less demand for traditional office spaces.
Vacancy Rates and Rents: About 18% of office spaces are empty, which is slightly more than in previous years. However, rents have stayed mostly the same. To attract tenants, landlords are offering perks like better office improvements and more flexible lease terms.
Popular Areas: Some areas like Downtown LA and Century City have higher vacancy rates, while places like Silicon Beach, which attract tech companies, are doing better. The tech industry's growth is keeping demand strong in these areas.
Retail Sector: Adapting to Change
The retail sector in Los Angeles has faced difficulties, but it is adapting. With more people shopping online, physical stores need to offer something special to attract customers.
Experiential Retail:Many stores are creating unique in-person experiences that can't be found online. Pop-up shops and interactive showrooms are examples of how retailers are trying to draw in customers.
Vacancy and Leasing:Retail vacancy rates have stabilized at about 6.5%. High-traffic areas and shopping centers that combine retail with dining and entertainment are seeing more leasing activity.
Industrial Market: Strong and Steady
The industrial real estate market in Los Angeles is thriving. The demand for warehouses and logistics centers is high due to the growth of e-commerce and manufacturing.
Low Vacancy and High Rents:Only about 2.5% of industrial spaces are vacant, making it a tight market. This has pushed rents higher, especially in key locations. Investors are very interested in industrial properties, leading to competitive bidding.
Sustainability Trends: There is a growing focus on sustainability in the industrial sector. Properties with green certifications and energy-efficient features are in demand, helping reduce costs and support environmental goals.
Investment Landscape: Balancing Opportunities and Risks
Investing in Los Angeles commercial real estate involves both opportunities and risks. Economic uncertainty and changing interest rates are influencing how investors make decisions.
Capital Flows: Despite uncertainties, Los Angeles remains attractive to both local and international investors. The city's diverse economy and strategic location drive this interest. Investors are particularly interested in industrial and tech-focused office spaces.
Risk Management: Effective risk management is crucial. Investors are doing thorough research and focusing on properties with strong long-term potential. Diversifying investments across different types of properties and locations is a common strategy to reduce risk.
Conclusion: A Market in Transition
The Los Angeles commercial real estate market in 2024 is in transition. While there are challenges, there are also many opportunities for those who can navigate this dynamic environment.
Staying informed about emerging trends and being flexible will be key to success. Whether you're an investor, developer, or tenant, understanding the current landscape and anticipating future changes will help you make the most of the Los Angeles commercial real estate market.
If you have more questions regarding any commercial real estate investments, don’t hesitate to reach out to us at KarlMarkarian@KMAssociates.Co or 818-433-0548
