By Lilly Riddle
Office space leasing in Los Angeles has contracted significantly since the COVID-19 pandemic, with companies taking less space and committing to shorter lease terms, according to market data from Cushman & Wakefield’s Los Angeles Office Market Q1 2024 Report. This decline reflects a broader reevaluation of workspace needs by companies embracing remote and hybrid work models, a continuation of a trend from the past few years.
Data from the report shows a persistent decrease in the average size of lease agreements compared to pre-pandemic levels. For the period between 2015 and 2019, the average office lease in LA encompassed 14,176 square feet. Since the pandemic began — from 2020 to 2024 — the average lease size has shrunk from 14,176 square feet to 10,034 square feet, or roughly 30 percent. Data in the report show how much the pandemic affected leasing, with the average direct deal size dropping from 16,600 square feet in 2019 to 6,700 square feet in 2024, or 60 percent lower.
This trend carries over to typical lease term length as well, resulting in a decline that is consistent across all property types. From the period between 2015 and 2019 to the period between 2020 and 2024, renewal terms dropped 12 percent, direct lease terms dropped 11 percent, and sublease terms dropped by 10 percent. The average term length overall has decreased by 11 percent to 64 months since 2020 — down from 73 months in the period between 2015 and 2019.
Additionally, key markets like LA Central and West, once dominated by long-term leases of 10 years or more, have seen a significant shift towards short-term leases of less than five years and medium-term deals of between five and nine years. Now, medium-term leases outnumber short- and long-term leases in LA West, LA North, LA South and Tri-Cities. And in LA West, a major market, short-term leases increased by 69 percent.
Long-term leases still significantly outnumber short- and medium-term leases. However, the number of medium-term leases has increased since COVID-19, while long-term leases dropped by an average of 12 percent.
While companies are taking less space overall, there’s a growing preference for higher-quality offices. The average square footage leased for medium-term deals in Class A space, the most desirable category, has increased by 14 percent compared to pre-pandemic levels. This suggests a continued demand for premium office space but with a preference for shorter commitments. For Class A deals of more than 10 years, the average square footage leased decreased by 13 percent from 2020 to 2024. The number of Class A leases went up in every office size category, showing the market’s propensity for higher-quality space across the board.
