Los Angeles office leasing activity reached 14.3 million square feet in 2025, the highest annual volume recorded since the pandemic and a notable 600,000 square feet increase from 2024, according to Savills’ Q4 2025 Office Market Report. While the total remains well below the 17.9 million square feet achieved in 2019, the upward trajectory signals growing confidence among tenants navigating the post-pandemic office landscape.
The market’s improving fundamentals were evident in the fourth quarter’s largest transaction: Farmers Insurance’s 251,774-square-foot headquarters renewal at 6301 Owensmouth Avenue in the West San Fernando Valley. The deal marked a significant recommitment after the insurer had previously marketed the full building for sublease. Farmers Insurance will vacate its former space at 6303 Owensmouth Avenue as part of the consolidation.
Tenant decision-making throughout 2025 reflected a continued preference for premium space, with new locations and relocations representing 55.8 percent of leasing activity. This pattern underscores the bifurcated nature of the recovery, where best-in-class properties command tenant interest while older, lower-quality buildings struggle to attract occupiers.
Rents Inch Higher as Sublease Options Diminish
As demand has gradually firmed, asking rents have followed suit. The overall average asking rent climbed to $4.03 per square foot in the fourth quarter, up 2.0 percent year over year, according to the Savills report. Class A properties saw even stronger growth, with asking rents increasing 3.1 percent to $4.30 per square foot over the same period.
The modest upward movement in rents reflects thinning sublease options across the market. Sublease availability declined to 8.4 million square feet in the fourth quarter, down from 8.7 million square feet in the third quarter and 10.6 million square feet one year earlier. The decrease marks continued progress from the 11.0 million square feet peak reached in the third quarter of 2024.
Despite this improvement, sublease supply remains nearly double pre-pandemic levels of 4.3 million square feet recorded in the fourth quarter of 2019. Market conditions continue to favor tenants, who are securing generous concessions that keep effective rents in check even as asking rates rise.
Notable Transactions Span Multiple Sectors
Beyond Farmers Insurance, several other significant renewals and relocations shaped the quarter’s leasing landscape. United Talent Agency renewed 193,591 square feet at 9336-9346 Civic Center Drive in Beverly Hills, while Northrop Grumman committed to 124,400 square feet at 3701 Doolittle Drive in the South Bay.
New location activity included In-N-Out’s 98,504-square-foot lease at 924 Overland Court in the San Gabriel Valley and Canvas Worldwide’s 68,301-square-foot commitment at 2330 Utah Avenue in El Segundo. The General Services Administration renewed 94,910 square feet at 725 South Figueroa Street in Downtown Los Angeles, demonstrating continued government presence in the urban core.
Technology and media companies remained active participants in the market. Electronic Arts executed a renewal and expansion totaling 93,193 square feet at 4820-4840 Alla Road in Marina/Playa Vista, while Hallmark Media took 60,877 square feet at 3300 West Olive Avenue in Burbank for a new location. Marvell Semiconductor renewed and expanded into 66,519 square feet at 112 South Lakeview Canyon Road in the West San Fernando Valley.
Availability Edges Lower But Remains Elevated
Overall availability stood at 27.6 percent in the fourth quarter, down 60 basis points year over year but still significantly elevated compared to historical norms. The decline reflects both new leasing activity and the absorption of previously sublease space that has returned to the market as direct availability. Total inventory contracted to 214.2 million square feet from 216.6 million square feet one year earlier, a decrease of 2.4 million square feet.
The market’s submarket performance varied considerably. Century City and Beverly Hills posted the lowest availability rates at 11.1 percent and 16.3 percent, respectively, while Culver City and Miracle Mile recorded the highest rates at 37.8 percent each. Rental rates showed similar divergence, with Century City commanding $7.32 per square foot and Beverly Hills at $6.21 per square foot, compared to the San Gabriel Valley’s $2.50 per square foot.
Outlook Points to Continued Gradual Recovery
The report projects that leasing momentum will carry into 2026, provided economic and business uncertainty continues to ease. Rent performance will likely remain bifurcated by asset quality and location, with best-in-class space commanding premium pricing while older properties face ongoing pressure.
Excess supply remains a structural drag on the Los Angeles office market’s recovery. Persistently high availability is expected to temper the pace of market-wide normalization despite improving demand fundamentals. The slow absorption of sublease space back into direct inventory will continue to create headwinds for landlords seeking to increase effective rents and reduce concession packages.
The 2025 leasing total of 14.3 million square feet, while representing the strongest year since the pandemic, still reflects activity levels approximately 20 percent below pre-pandemic norms. This gap underscores the ongoing recalibration of office utilization as hybrid work arrangements become permanent fixtures of the corporate landscape. The path to full recovery will likely require sustained increases in leasing velocity and continued absorption of the elevated availability that has characterized the post-pandemic period.
