Business
L.A.'s office market takes a hit amid trade wars, fires and economic uncertainty
Tenants hunting for office space in the Los Angeles area are in the driver’s seat as vacancies plague many landlords trying to fill their buildings with people.
The greater Los Angeles office rental market started the year with a turbulent first quarter and historically high vacancies as tenant demand was persistently soft in spite of more robust return-to-office policies coming from managers.
A notable exception was Century City, which is experiencing tight occupancy and some of the highest rents in the West.
Countywide, though, overall office vacancy reached a new high of 24.2%, real estate brokerage CBRE said. When “shadow” office space that is leased but not occupied is considered, overall availability is more than 29% — about triple what is considered a healthy market balance between landlord and tenant interests.
Real estate experts hoped for better at the end of 2024 as the leasing market that had been lagging since the COVID-19 pandemic began showed signs of recovery, including more companies calling for workers to return to their desks. Then came the devastating wildfires and economic uncertainty caused by President Trump’s global tariffs.
Century City Center is nearly fully leased even though it isn’t slated to open until early next year, real estate broker Gary Weiss of LA Realty Partners said.
(Allen J. Schaben / Los Angeles Times)
“We were more optimistic heading into 2025,” CBRE property broker John Zanetos said, as the county office market saw year-end leases signed by some good-sized tenants including toy makers Mattel and Jazwares.
The January wildfires that knocked the city back on its heels put many business decisions on pause.
Later in the quarter, confusion about tariffs and potential trade wars introduced another element of uncertainty, said Michael Soto, vice president of research in the western region for real state brokerage Savills.
Real estate analysts are watching “very closely” to see whether there is new hesitation in decision-making among business leaders that could slow down initial public offerings of stocks, mergers and other ventures that would typically lead to acquisitions of office space, Soto said.
“Anxiety is back in the market,” he said. Some tenants “are probably slowing down their decision-making until there is a little more clarity in the macroeconomic environment.”
The downtown Los Angeles office market, one of the region’s largest, continued to struggle in the first quarter, with vacancy hitting nearly 34% and overall availability at 37%, slightly up from a year earlier, CBRE reported.
Downtown has struggled with vacancy for decades, but companies’ cutbacks in their office space since the start of the pandemic have helped drive down the values of office buildings and pushed some landlords into such financial stress that they’re having a hard time coming up with the money to attract tenants, Zanetos said.
A view of downtown Los Angeles last year. The area’s office market continues to struggle, with vacancy hitting nearly 34% and overall availability at 37%, slightly up from a year earlier, CBRE reported.
(Brian van der Brug / Los Angeles Times)
Among the upfront costs for landlords is paying for office space to be prepared for new tenants as part of their lease agreements. Landlords also are expected to maintain their properties at a level that tenants will find acceptable, which becomes a challenge when landlords are in a shaky financial position.
“There are very few buildings that can actually transact” leases, he said, because they can give tenants the financial concessions they need to move in.
Those buildings “are doing extremely well,” he said, and some are more than 90% leased.
There are still some potential tenants looking for large amounts of space to rent in Los Angeles County, Zanetos said, including the Los Angeles Department of Water and Power. The DWP is planning to renovate its historic landmark headquarters on Bunker Hill and needs about 300,000 square feet to move into while the work gets done, he said.
“That would be a huge shot of positive absorption” in the office market, he said. He declined to identify other large potential tenants in the market because their searches are confidential, he said.
The DWP’s mid-century-style John Ferraro Building on Hope Street was completed in 1965 and houses about 3,300 employees. Renovations and an accompanying temporary move of employees are still in planning stages, DWP representative Joe Ramallo said.
The Los Angeles Department of Water and Power plans to renovate the mid-century-style John Ferraro Building on Hope Street, which houses about 3,300 employees, DWP representative Joe Ramallo said.
(Los Angeles Times)
The DWP also may consider buying a building, Ramallo said. Last year, the County of Los Angeles bought the 55-story Gas Company tower for $200 million, far less than its appraised value of $632 million in 2020.
One neighborhood that is actually thriving in the overall soft leasing market is Century City, where vacancies are few and rents are high because demand is strong, especially among attorneys and entertainment firms including Creative Artists Agency.
“Century City is an outlier, and has been for years in terms of performance on rent and occupancy,” real estate broker Gary Weiss of LA Realty Partners said.
The neighborhood created in the 1960s on land west of Beverly Hills that was formerly the backlot of 20th Century Studios (now Fox Studio Lot) has long been a favorite of law firms, a trend that has accelerated since the pandemic began, Weiss said.
Some of them are choosing to expand in Century City instead of downtown, where they have had presences for years, he said. Among them are Latham & Watkins and Sidley Austin.
“Much of this is a reflection on what’s happening downtown with the homelessness, with the increased vacancy, with the safety factor,” Weiss said. “And so a lot of these firms are uprooting from downtown.”
The neighborhood “has high-quality buildings with first-rate security,” he said. “It’s safe, it’s clean.”
Century City also has a rarity in L.A.’s office market — a flashy new high-rise under construction. The 37-story Century City Center is being built by Chicago landlord JMB Realty, one of Century City’s largest property owners.
Creative Artists Agency, one of Hollywood’s biggest talent agencies, has agreed to be the anchor tenant in the building on Avenue of the Stars. Other signed tenants include Sidley Austin and investment firm Clearlake Capital, real estate data provider CoStar said.
Century City Center is nearly fully leased even though it isn’t slated to open until early next year, Weiss said.
Overall vacancy in Century City is 13%, according to CBRE. Landlords are asking for nearly $7 per square foot per month, compared with the county average of $4.29 per foot for good-quality office space.
Sales of office buildings have slowed, in part because large institutional investors are skeptical that property values will appreciate enough to resell them at a profit after five years, as is common practice.
Private buyers or public entities such as Los Angeles County have picked up some downtown office towers at “huge discounts” compared with what it would cost to erect similar new buildings, Zanetos said.
Other private buyers are investing in fairly new buildings filled with tenants, which are considered low-risk investments. This month, Kingsbarn Realty Capital, a Las Vegas firm that caters to private investors, paid $105 million for Vine Street Tower in Hollywood that is fully leased by Skims Body Inc., a shapewear and clothing brand co-founded by Kim Kardashian.
The building was completed in 2017 and extensively renovated last year, real estate brokerage Newmark said.
Times staff writer Matt Hamilton contributed to this report.
Residents of Monterey Park voted overwhelmingly to ban data centers on election day, making the San Gabriel Valley city the first in the nation to do so by public vote.
As of Wednesday, 86% of votes were in favor of Measure NDC, the city ban, according to the Los Angeles County registrar-recorder/county clerk.
Other cities and towns have passed moratoriums on data centers, as a wave of opposition sweeps the country. But the Monterey Park vote can only be overturned by another ballot measure, making it the most permanent data center ban in a jurisdiction.
Monterey Park’s City Council had already banned data centers by ordinance, after a proposed 247,000-square-foot data center met an outpouring of public anger and concern. The developer withdrew that plan.
That facility would have been less than 500 feet away from the nearest home, and would have used three times the electricity of the entire 60,000-person city. Residents said it would have caused noise and air pollution and driven up electricity rates.
“This ensures long-lasting protections for current and future generations,” Amy Wong, co-founder of the group San Gabriel Valley Progressive Action, said of the vote. “It means that future city councils cannot overturn a data center ban, even if data center developers wanted to spend money to fund pro-data center candidates.”
The measure had no formal opposition. The developer of the proposed facility, investment firm HMC StratCap, said it wouldn’t engage in the ballot fight when it withdrew in March.
The Data Center Coalition, an industry trade group, expressed disappointment in the vote.
“It sends a signal that the area is closed for business, both for data centers and for other significant economic development projects,” state policy director Khara Boender said.
“It deprives local residents of the opportunity to compete for jobs and investment, while also causing the area to relinquish substantial long-term economic investment, high-wage jobs, and critical tax revenue to neighboring areas or other states.”
SGV Progressive Action worked with hyperlocal groups including No Data Center Monterey Park to rally support for the measure.
The group is now focused on stopping data center proposals in the City of Industry and fighting a move by City of Industry, Santa Fe Springs, Vernon and City of Commerce to welcome data centers and other industry with fast-tracked permitting and tax incentives.
City of Industry, in the San Gabriel Valley, and Vernon, south of downtown L.A., are primarily industrial areas, each with around 300 permanent residents. They are employment centers, and tens of thousands of workers commute in daily.
There has been little vocal opposition to data centers among the few residents of these cities. Wong said the protest is primarily coming from the surrounding neighborhoods.
“If a data center gets built in City of Industry, residents across the region would bear the brunt of pollution and increased utility costs,” Wong said, noting that it is surrounded by 16 other cities and unincorporated communities.
Data center proposals have been limited in California compared to Virginia, Texas, Georgia, Illinois and Arizona, which sit at the center of a recent boom in hyperscaler facilities to power artificial intelligence.
California has the third-most data centers in the country, with 300, but high electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in other hotspots.
That doesn’t mean opposition hasn’t been fierce. In Coachella and Imperial County, residents are showing up in droves to protest local proposals.
In the San Gabriel Valley, Montebello, El Monte and Baldwin Park have all enacted temporary moratoriums, and Alhambra recently banned data centers as part of a zoning code update.
Wong said she hoped the ballot measure vote would galvanize the opposition. “The vote is a testament to the people power of our region,” she said. “Our region is worth protecting, and we won’t let data centers determine our future.”
A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.
The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.
The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.
“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”
Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.
It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.
Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.
“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.
Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.
“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”
Mitchell did not immediately respond to a request for comment.
There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.
In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.
In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.
A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”
“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.
Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.
L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.
Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.
Newsom defended the price-gouging protections shortly after they went into effect.
“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”
The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.
“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.
Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.
Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.
The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
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