West Los Angeles Commercial Property Sales

West Los Angeles Office Market

West Los Angeles commercial property sales volume for office properties has decreased significantly due to the virus outbreak. Sales prices have decreased slightly but the future is uncertain. Deals underway have been paused and close dates remain unknown. Lenders decreased lending. As of now, we are in a down market with the extent based on a variety of factors with COVID-19 leading the way.

Costar is predicting a “baseline scenario for near-term price erosion of around 16% on a per-SF basis, but pricing would see a sustained recovery commence in the second half of 2021,” Modern downside scenario is a decline by 21% over the next several quarters. “After a modest bounce back, price declines would resume through 2024. Even by early 2025, pricing would remain 23% below peak levels of 20Q1.”

There are two schools of thought regarding the future of office space in the West Los Angeles market and across the nation. The first is that office space will be in higher demand because the smaller footprints and open floor plans will not work in the new pandemic environment which will require larger offices to be leased by commercial tenants. The other theory and most likely the prevailing one is that the work-from-home trend will continue and Zoom meetings are not going away even after the COVID-19 crisis subsides. Of course, less workers in the office would equate to less demand for office space. A hybrid model is probably the most logical long term scenario, but the exact affect on vacancy, rental rates, and sale prices is unknown at this time. The projections above give a decent range to gauge from, but can’t be considered for long term forecasting.

December 1, 2019 to March 30, 2020

Median Price per Square Foot Sold: $914.50

Sold Transactions: 29

March 30, 2020 to June 30, 2020

Median Price per Square Foot Sold: $441.75 (51.7% decrease from the previous 3 month period)

Sold Transactions: 3 (89.7% decrease from the previous 3 month period)

West Los Angeles Retail Market

West Los Angeles commercial property sales volume for retail properties has decreased significantly, but surprisingly less than office properties, over the last three months. Sales prices have decreased slightly but larger decreases are expected as brick and mortar retailers struggle to survive during the on-again-off-again shut down. Deals underway have been paused and close dates remain unknown. Lenders have also decreased loans in particular for retail properties. We expect both pricing and sales volume to continue their downward trajectory.

According to Costar forecasters, “baseline scenario, vacancies would be poised to notably increase during the second half of this year, peaking in mid-2021, surpassing levels seen during the last recession. The sector would see a sustained recovery kick in during the second half of 2021. In the more pessimistic Moderate Downside scenario, vacancies would continue to rise through 2024, reaching levels well beyond the previous peak. Only in 2024 would the sector see a recovery commence. ” Retail sales price trends would most likely mirror the retail leasing fluctuations. The West Los Angeles commercial property sales cap rate was already one of the lowest in the country, so it’s difficulty to see a scenario where retail sales prices rise significantly anytime soon.

December 1, 2019 to March 30, 2020

Median Price per Square Foot Sold: $600.52

Sold Transactions: 61

March 30, 2020 to June 30, 2020

Median Price per Square Foot Sold: $514.85 (14.3% decrease from the previous 3 month period)

Sold Transactions: 29 (52.5% decrease from the previous 3 month period)