Yield Range
4.5-5.5%
Vacancy Rate
25.1%
Active Deals
1
Outlook
Cautious
Los Angeles commercial real estate posted $37.3 billion in total sales volume in 2025, a market-level rebound despite structural headwinds in the office sector. Office vacancy reached 25.1% in Q4 2025, continuing a prolonged period of weakness driven by tenant consolidations, remote work, and downtown distress. Industrial market vacancy stands at approximately 4.6% - considerably tighter than office - though industrial rents have faced downward pressure with asking rents declining 10.2% year-over-year through Q2 2025. Capital Group's acquisition of Bank of America Plaza at approximately $150 per SF from Brookfield represents a landmark distressed transaction illustrating the depth of repricing in Downtown Los Angeles.
Yields & Returns
Vacancy & Supply
Vacancy Rates
Office vacancy in Greater Los Angeles was 25.1% in Q4 2025 per CBRE, reflecting continued absorption weakness. Industrial vacancy was 4.6% in Q4 2025 per Cushman and Wakefield (and 4.8% in Q2 2025), tight relative to the national average but widening from prior cycle lows. Multifamily occupancy is 95.2% in Q4 2025, implying residential vacancy of approximately 4.8%.
Supply Pipeline
Industrial pipeline totaled 4.5 million SF under construction across 33 properties at end of Q2 2025, with 95% speculative. Multifamily pipeline is approximately 17,600 units under construction in Q4 2025. The Citywide Adaptive Reuse Ordinance (expanded) enables office-to-residential conversions via staff-level approvals, accelerating the repurposing of obsolete commercial stock. Metro D Line Extension Section 1 opens May 8, 2026 (Wilshire/La Brea, Wilshire/Fairfax, Wilshire/La Cienega stations); Section 2 targeted for Spring 2027; Section 3 Fall 2027.
Competitor Activity
Capital Group acquired the distressed 55-story, 1.4 million SF Bank of America Plaza at 333 South Hope Street in Downtown Los Angeles from Brookfield Properties for approximately $210 million ($150 per SF) in March 2026. Brookfield had previously defaulted on a $400 million CMBS loan on the tower, which was appraised at $605 million in 2016. Capital Group is an existing 320,000 SF tenant and plans to consolidate over 2,100 employees in the building. The $37.3 billion in total 2025 market-wide sales volume also included Riot Games' $231 million owner-user acquisition of the Element LA campus.
| Firm | Activity | Asset | Detail | Value |
|---|---|---|---|---|
| Capital Group / Brookfield Properties | Acquisition (Distressed) | Office | Capital Group (existing tenant, 320k SF) acquired the 55-story, 1.4M SF Bank of America Plaza at 333 South Hope Street from Brookfield Properties for approximately $210M ($150/SF). Brookfield had defaulted on the prior $400M CMBS loan. Capital Group plans to consolidate 2,100+ employees in the building. | $210M |
Demand Drivers
Rental Market
Employment & Economy
Migration & Demographics
Transport & Connectivity
Key Risks
Office structural demand shift: vacancy at 25.1% in Q4 2025 implies prolonged absorption headwinds, further distress, and conversion pressure. Industrial rent declines of 10.2% year-over-year raise NOI and valuation risk for recent acquisitions and may pressure refinancing. Measure ULA transfer tax and entitlement complexity are cited as restraining transaction volumes. Wildfire risk creates property and insurance cost shocks and potential demand dislocations in hillside and periurban areas. Population decline in LA County is a structural headwind for long-term rental demand. Higher-for-longer interest rates and maturing debt remain elevated cost-of-capital pressures across all asset classes.
Outlook 12–24 Months
Los Angeles enters the 12 to 24 month outlook period with a bifurcated market: industrial and multifamily fundamentals are comparatively stable despite softening, while office faces a prolonged recovery from 25%+ vacancy. The D Line Extension openings will gradually improve Westside transit access and support development around new stations. Industrial rents are expected to fall approximately 0.9% in 2025 before stabilizing and improving in 2026, aided by a modest pipeline. The Capital Group/BofA Plaza deal establishes a pricing floor for distressed DTLA office stock, and the adaptive reuse ordinance should accelerate supply reduction over time. The overall outlook is cautious given population headwinds, tax friction, elevated office vacancy, and macro uncertainty from tariffs and rate policy.
Sources