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TOTAL VACANCY INCREASES TO 15.0% IN THE SOUTH BAY AS RECESSION WORSENS
As the worst recession in decades has taken its toll on the region, the South Bay office market at the beginning of 2009 saw deteriorating market conditions across the board. With lower leasing activity, higher vacancy, and decreasing average asking rents, the area began 2009 on a down note.
However, compared to other office markets within the Greater Los Angeles Basin, the weakness in the South Bay office market was not as pronounced.
The South Bay office market experienced a 120 basis point increase in the total vacancy rate from a revised vacancy rate of 13.8% at year-end 2008 to 15.0% at the end of Q1 2009. Average asking rental rates decreased to $2.02 per square foot Full Service Gross (FSG), which is the lowest average asking rents have been market-wide since 2007.
Despite weakened office fundamentals, we continue to expect only moderate increases in office vacancy rates due to the relative lack of construction in recent years. As a result, we maintain that the area is better positioned than other markets through the Greater Los Angeles Basin to weather the downturn as most tenants and landlords look at 2009 as a year of survival.
Contact Michael Soto at 213.532.3220 for more information.
  OFFSB09Q1.pdf
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