Los Angeles office leasing improves in early 2025

The forecast expects that the worst of occupancy losses are likely in the rearview mirror

By Ryan Patap

CoStar Analytics

April 10, 2025 | 9:53 AM

Los Angeles saw an estimated 5.3 million square feet of leases signed in the first quarter of 2025. The first quarter’s activity appears to represent an improvement from recent quarters and the greatest activity since the second half of 2023.

Vacancy stopped its ascent for the first time since early 2020, declining by 40 basis points to 15.8%. Net absorption, representing the square footage tenants moved into minus vacated, was positive for the first time in almost three years.

Representing one of the largest nonrenewals this quarter, Regal Medical Group leased around 155,000 square feet in two properties in Corporate Point at West Hills in the western San Fernando Valley. The lease term is for three years. Looking at renewals, law firm Dentons renewed its 62,000-square-foot offices in downtown Los Angeles at Figueroa at Wilshire.

The outlook for this year anticipates continued market softening; however, the worst of occupancy losses is expected to be behind the market. Vacancy is forecast to rise further, reaching around 16.5% by the end of 2026. While year-to-date improvements are promising, market conditions are expected to remain weak for years. Rent growth is forecast to trail inflation through at least 2030. Given this outlook, developers and investors will likely continue to show restraint.