The Los Angeles 2023 commercial real estate market has clearly been an experience for many in the property industry. On the one hand, various sectors retained stability and price value despite fluctuating demand levels throughout the year. On the other hand, inflation and challenges with filling offices have continued since the return from the pandemic, and Los Angeles in general has continued to struggle to recover from the abandonment of the inner core to the suburbs with remote work.
A Built-in Economic Impact Shield
The above said, commercial real estate in Los Angeles has continued to have a lot of movement, as seen by experts like Steven Taylor LA, particularly in the industrialized sectors. While nationwide the commercial sector has been pounded in major cities across the country with persistent vacancies and over-supply, Los Angeles has continued to rely on the heavy output of its dual ports, Long Beach and Los Angeles proper, for shipping demands and related facilities. In this respect, Los Angeles has been sheltered in some respects due to its industrial side working as a buffer against real estate pressures. What might have been vacated by other businesses was gobbled up again by logistics, shipping and storage. E-commerce continues to keep pumping hard, which maintained what was already occupied as well.
The New Normal?
The same buffer isn’t expected to drop going forward. In fact, many market experts are pegging that the industrial commercial market will continue to increase its demand by another 10 percent over the next few years. That, in turn, continued to keep prices stable as well as going forward too. And that kind of resilience is what has made Los Angeles remain attractive for companies and businesses. Where other areas like Detroit or Portland are becoming abandoned ghost towns, Los Angeles commercial real estate continues. It’s not perfect, it has retail vacancies like big cities all over the country, but the West Coast city continues to hold substantially better than other markets that have taken a painful beating since 2020.
Office versus Other Commercial
The office market in particular has recovered from the pandemic at a much slower rate, struggling to find its previous activity level. Vacancy throughout 2023 was at a painful 15+ percent, higher than 2022. Many companies had previously downsized to release themselves from cost liabilities that were no longer producing functional value. That said, conversion of commercial space into other business needs was also happening as well. Many property owners proactively responded with concessions, discounting and proactive marketing to offset these impacts and to push recovery. As a result, Los Angeles office utilization stayed at a stable pace, bolstered by what Steven Taylor Los Angeles analysis sees as reduced construction, which pushed customers towards existing vacant space instead.
Being Prepared for Sticking With the New Versus Going Backwards
Many might be thankful that 2023 is coming to an end and expect a boost in 2024 because a new year should generally get better. However, for seasoned experts, a challenging market may be the norm for a while, which provides interesting opportunities for seasoned commercial real estate investors and flushes out not so serious players, creating unnecessary competition