The last three years have seen office vacancy rates rise in cities across the country due to remote work, and areas of Southern California have not been immune to this trend. In the Los Angeles, Orange County, and Inland Empire office markets, office vacancy jumped 67 percent, according to new second quarter data from Cushman & Wakefield. Just before the start of the pandemic, there was 41 million square feet of vacant office space in Southern California, which added up to a vacancy rate of 13 percent. As of this June, there is now 68 million square feet of unleased office space, which equates to a 21 percent vacancy rate. The jump is significant, and is the most pronounced in Los Angeles County, which added 20.7 million square feet to the total vacant space count since 2019, a 73 percent increase. Nationwide, office vacancies grew 50 percent over the same time period, rising to 19.2 percent from 13 percent pre-pandemic.
The news comes at a time when many office landlords are still struggling to fill empty spaces. While many companies began 2023 with a harder push for returning to the office more days out of the week, office occupancy numbers are still hovering near 50 percent on average across the country. Southern California’s vacancy rate is still lower than San Francisco’s office market, which hit a record high of 31.8 percent in the second quarter of this year, according to CBRE data. One of the biggest drivers of empty space in the city has been the ongoing trend of tech companies shrinking their office footprints or relocating out of the city altogether. Recent reports have projected that the loss of office property values could soar up to $800 billion due to the ongoing popularity of remote work, and some major property owners have made headlines when they defaulted on office properties. But despite the doom and gloom, there are still markets where office fundamentals are solid, and offices are increasingly being repurposed for other uses.