At the close of 2023, Southern California finds itself grappling with a substantial oversupply of office space, as revealed by Cushman & Wakefield’s year-end office reports for the Los Angeles, Orange County, San Diego and Inland Empire regions. Southern California witnessed 81 million square feet of vacant offices out of a total supply of 398 million square feet, resulting in a significant 20 percent vacancy rate.
Despite the leasing of 20 million square feet to new tenants over the past year, the market fell short by seven million square feet compared to the space added due to companies abandoning traditional offices. The enduring work-from-home trend, a consequence of the pandemic’s transformative impact on the economy, continues to reshape the job market.
Comparatively, the state of Southern California’s office space has undergone a remarkable shift since 2019. At that time, the region had 41 million square feet of empty offices, reflecting a 13 percent vacancy rate.
Cushman & Wakefield’s data provides a detailed breakdown of vacancy rates in specific regions:
- Los Angeles faces a 24 percent vacancy rate with 51 million square feet vacant.
- Orange County reports a 19.6 percent vacancy rate with 18 million square feet vacant.
- San Diego experiences a 14.5 percent vacancy rate with 10 million square feet vacant.
- Inland Empire, with 2 million square feet vacant, maintains a lower 9.5 percent vacancy rate.
Zooming in on specific areas within Southern California reveals varying vacancy rates. Downtown non-central Los Angeles tops the list with a staggering 33 percent vacancy rate, closely followed by the Mid-Wilshire neighborhood at 30 percent. In contrast, Inland Empire East boasts the lowest vacancy rate at 9 percent.
This data underscores the profound impact of remote work and economic shifts on the demand for office space in Southern California. As companies continue to reassess their office needs, the region’s commercial real estate landscape faces a challenging period of adaptation to the evolving dynamics of the modern workplace.
