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AVERAGE ASKING RENTS UP DESPITE SLOWDOWN IN SALES AND LEASING ACTIVITY
Due to the weakness in the local economy, the vacancy rate in the South Bay office market increased 30 basis points from last quarter to 15.1% in Q2 2008. While this is higher than the 8% to 11% range considered “healthy”, it is still a vast improvement over vacancy rates that touched 20% just three years ago. The South Bay office market did see a second quarter in a row of increasing vacancy rates, however, the market at the same time experienced an eighth consecutive quarter of increased rental rates. Asking rental rates were still up 6.7% over a year ago.
The second quarter also saw the long-awaited completion of The Edge at Campus El Segundo which delivered 152,900 SF to the market. Despite the uptick in the vacancy rate, the limited amount of construction and still increasing rental rates suggest that fundamentals are still strong within the South Bay office market. While the local economy is projected to remain weak throughout the remainder of 2008, expect the South Bay office market to weather the downturn better than other markets throughout the Los Angeles Basin.
Contact Michael Soto at 213.532.3220 for more information.
  OFFSB08Q2.pdf
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