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15.3%Total vacancy rate

$3.04 PSFWeighted average asking

rental rate

Market OverviewSteady job growth continued to contribute to the health of the Los Angeles economy, with the largest job gains seen in education, health care, hospitality, professional services, government, and finance. Specifically, the Los Angeles County unemployment rate fell 60 basis points year over year, from 5.4% February 2016 to 4.8% in February 2017.

Office leasing was bolstered by professional services, finance, media, technology, and health care. However, during the first quarter 2017, a significant amount of office space was given back to the market, over 1M sf: primarily from West LA. This came from relocations and down sizing. To that end, LA County vacancy rose to 15.3% first quarter, increasing 80 basis points from the previous quarter. This trend is expected to continue, as there is over 5M sf of office inventory under construction and renovation in the County of which approximately 15% is pre-leased.

First Quarter 2017 / Office Market Report

Los Angeles

Market Facts

4.8%Los Angeles County unemployment rate

1,054,110 SFNegative net absorption

Photo by Mott Smith

Increased construction of highly amenitized

creative office projects continued to drive

average asking rents higher for another quarter: up approximately 4.3% over last

quarter, to $3.04 psf FSG. Despite having

significant negative net absorption, West Los

Angeles continued to boast the highest

submarket rents, at $4.46 psf, while the next

highest rents are in Downtown Los Angeles,

at $3.24 psf. Downtown Los Angeles vacancy

now closely matches the Hollywood/Mid-

Wilshire submarket, with the highest

vacancies in the County. At the opposite end

of the pricing spectrum, the most affordable

average rent continues to be found in San

Gabriel Valley, at $2.19 psf, while Los Angeles

North follows at $2.31 psf.

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Los Angeles First Quarter 2017 / Office Market Report

Market By The Numbers

SubmarketExisting Inventory (SF)

Q1 2017 Vacancy %

Q4 2016 Vacancy %

Q1 2017 Net Absorption (SF)

YTD Net Absorption (SF)

Q1 2017 Completions (SF)

U/C & Renovation (SF)

Weighted Avg Asking Lease Rate

DOWNTOWN 33,582,484 18.3% - Bunker Hill 8,093,972 17.2% - Financial District 19,047,053 20.5% - Greater Downtown 2,723,876 14.1% - South Park 3,717,583 13.9% -

WEST LA 58,386,089 11.4% 418,780 Beverly Hills 6,977,723 13.2% - Brentwood 3,339,045 7.9% - Century City 10,651,831 8.8% - Culver City 3,983,215 11.4% - Marina Del Rey/Venice 6,974,715 15.2% 418,780 Miracle Mile 5,300,964 10.9% - Olympic Corridor 3,070,722 4.6% - Santa Monica 9,361,521 12.9% - West Hollywood 3,009,176 12.4% - West Los Angeles 869,701 19.0% - Westwood 4,847,476 11.8% -

TRI CITIES 23,418,595 13.2% - Arcadia 622,000 1.0% - Burbank 6,889,044 13.1% - Glendale 6,409,491 11.3% - Monrovia 1,139,708 15.5% - Pasadena 8,358,352 15.2% -

SOUTH BAY 33,518,382 16.1% - 190th Street Corridor 3,469,129 26.5% - Central Torrance 4,462,804 10.3% - Downtown Long Beach 5,074,266 16.2% - El Segundo/Beach Cities 11,579,365 9.7% - LAX 4,416,768 35.4% - Long Beach Airport 4,516,050 11.1% -

LA NORTH 31,374,602 13.6% - Central SF Valley 4,840,995 10.6% - Conejo Valley 6,478,926 15.5% - East SF Valley 2,272,559 10.4% - Santa Clarita Valley 2,298,139 16.4% - West SF Valley 15,483,983 13.9% -

SAN GABRIEL VALLEY 10,214,373 14.1% - East San Gabriel Valley 6,527,415 15.5% - West San Gabriel Valley 3,686,958 11.6% -

HOLLYWOOD/MID-WILSHIRE 14,896,554 323,273 Hollywood 4,337,232 18.7% 323,273 Mid-Wilshire 10,559,322 19.0% -

LA COUNTY 205,391,079 742,053 14.5%

18.9%

18.4%15.8%21.1%17.4%12.5%

14.2%13.9%8.6%8.6%

21.9%21.3%17.0%3.5%

13.2%20.0%19.3%15.8%

13.5%1.3%

13.2%10.9%12.8%16.7%

15.6%26.0%10.1%16.0%8.6%

34.8%11.7%

13.7%13.4%14.9%9.5%16.4%13.5%

15.1%17.4%11.2%

18.0%15.7%18.9%

15.3%

(41,225) (41,225)111,245 111,245

(115,557) (115,557)(89,354) (89,354)52,441 52,441

(1,228,402) (1,228,402)(43,245) (43,245)(23,114) (23,114)15,305 15,305(412,535) (412,535)(21,880) (21,880)(322,196) (322,196)33,472 33,472(30,430) (30,430)(227,367) (227,367)(2,704) (2,704)

(193,708) (193,708

(183,125) (183,125)(1,980) (1,980)(1,775) (1,775)23,304 23,30431,094 31,094

(233,768) (233,768)

122,133 122,13319,077 19,07710,858 10,85810,990 10,99084,283 84,28324,600 24,600(27,675) (27,675)

(21,045) (21,045)(131,743) (131,743)25,616 25,61620,334 20,334 1,394 1,39463,354 63,354

(105,677) (105,677)(121,665) (121,665)15,988 15,988

403,231 403,231390,326 390,32612,905 12,905

(1,054,110) (1,054,110)

$3.24- $3.25

372,775 $3.27 1,040,376 $2.851,071,561 $3.16

1,891,565 $4.46 132,450 $5.18

‐ $4.27 ‐ $4.63

1,041,927 $3.26 124,148 $4.76

‐ $3.86 ‐ $3.83

359,143 $5.13 233,897 $4.83

‐ $3.48 ‐ $4.22

20,624 $2.82 ‐ $2.29

20,624 $3.16 ‐ $2.64 ‐ $2.38 ‐ $2.96

116,744 $2.39 ‐ $2.10 ‐ $2.43 ‐ $2.36

116,744 $3.15 ‐ $1.84 ‐ $2.09

116,595 $2.31 20,480 $2.38

‐ $2.27 ‐ $2.48

96,115 $2.47

‐ $2.25

94,000 $2.19 ‐ $2.18

94,000 $2.22

$2.76

36,122$4.13$2.26

5,053,875 $3.04

2,484,712

     329,635     329,635

* Revisions to weighted average rent methodology were made effective Q12017; current data reported may not match data reported in previous quarters.

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Los Angeles First Quarter 2017 / Office Market Report

Q1 2017 Inventory (SF)

Q1 2017 Vacancy %

Q4 2016 Vacancy %

Q1 2017 Net Absorption(SF)

YTD Net Absorption(SF)

Q1 2017 Completions(SF)

U/C & Renovation(SF)

Weighted Avg Asking Lease Rate

DOWNTOWN 33,582,484 18.3% - Class A 18,291,733 15.3% - Class B 13,421,753 - Class C 1,868,998 -

WEST LA 58,386,089 418,780 Class A 45,482,636 418,780 Class B 11,708,721 9.9% - Class C 1,194,732 5.3% - -

TRI CITIES 23,418,595 - 20,624Class A 16,739,268 - - Class B 6,014,980 - 20,624Class C 664,347 8.4% - -

SOUTH BAY 33,518,382 - Class A 13,397,424 - 116,744 Class B 17,180,903 - Class C 2,940,055 - -

LA NORTH 31,374,602 - 116,595Class A 18,255,077 96,115 Class B 12,046,907 - 20,480Class C 1,072,618 - -

SAN GABRIEL VALLEY 10,214,373 - 94,000

Class A 4,120,835 - - Class B 5,360,041 - 94,000Class C 733,497 - -

HOLLYWOOD/ MID-WILSHIRE 14,896,554 -

Class A 7,020,456 - Class B 6,781,897 - - Class C 1,094,201 - -

LA COUNTY 205,391,079 Class A 123,307,875 Class B 72,515,202 - Class C 9,568,002 - -

18.4%14.6%23.0%25.8%

14.2%15.7%9.8%6.7%

13.5%14.7%9.9%15.8%

15.6%12.9%18.4%11.2%

13.7%14.2%13.0%12.5%

15.1%

10.6%20.3%

6.3%

18.0%

12.4%22.9%22.7%

15.3%14.5%16.8%14.9%

$3.24$3.49$3.19$2.73

$4.30$4.53$4.05$3.22

$2.82$2.96$2.44$2.10

$2.39$2.74$2.19

$1.92

$2.31$2.48$2.17$1.84

$2.19

$2.44$2.13$1.92

$2.76

$3.27$2.41$2.58

$3.04$3.43$2.61$2.30

  5,053,8754,053,212  1,000,663

     329,635

-

     2,090,002     394,710

              ‐

     1,891,565     1,092,215

  799,350

              123,112    123,11222.3%            (89,376)     (89,376)21.5%             (81,929)      (81,929)

11.4%           (1,228,402)   (1,228,402)

12.0%           (1,224,670)   (1,224,670)          13,305     13,305

            (17,037)     (17,037)

13.2%           (183,125)    (183,125)13.8%           (150,793)   (150,793)12.1%          17,348  16,820

              (49,152)  (49,152)

16.1%           122,133    122,13312.5%           (65,895)    (65,895)20.0%            240,904   240,9049.4%             (52,876)      (52,876)

13.6%             (21,045)    (21,045)13.9%             (56,327)    (56,327)13.3%             28,394    28,39413.1%             6,888  6,888

14.1%          (105,677)     (105,677)

11.2%             24,015       24,01517.3%          (135,891)     (135,891)7.2%               6,209       6,209

18.9%           403,231    403,231

13.6%           362,824   362,82423.5%             41,970    41,97022.5%             (1,563)      (1,563)

14.5%        (1,054,110) (1,054,110)13.1%        (951,017) (951,017)17.2%             86,340    86,34012.9%             (189,433)    (189,433)

            (41,225)    (41,225)                              2,484,712

116,744

     329,635

* Revisions to weighted average rent methodology were made effective Q1 2017; current data reported may not match data reported in previous quarters.

Los Angeles First Quarter 2017 / Office Market Report

Vacancy Rate

0.0%

2.0%

4.0%

6.0%

8.0%

2011 3Q 2012 3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q

Asking Rent

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2011 3Q 2012 3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q

Net Absorption

-2,500,000-2,000,000-1,500,000-1,000,000

-500,0000

500,0001,000,0001,500,0002,000,0002,500,000

2011 2012 2013 2014 2015 2016

Tenant Type Address Submarket SF

MOLINA HEALTHCARE NEW 222 W 6TH ST, SAN PEDRO SOUTH BAY 99,343

SNAPCHAT NEW 3340 OCEAN PARK BLVD, SANTA MONICA WEST LA 88,432

WILSHIRE & ASSOCIATES NEW 1299 OCEAN AVE, SANTA MONICA WEST LA 61,792

AMAZON WEST LA 60,772

HEALTHCARE PARTNERS

NEW 2425 OCEAN PARK BLVD, SANTA MONICA

NEW 1120 W WASHINGTON BLVD, LOS ANGELES DOWNTOWN LA 60,000

Top Lease

Address Buyer Seller Price SF P/SF

655 N CENTRAL AVE, GLENDALE DIVCO WEST

1537 NORFOLK ST, LOS ANGELES USC

5340 ALLA RD, LOS ANGELES JLLIPT

611 N BRAND BLVD, GLENDALE ONNI GROUP

2411 W OLIVE AVE, BURBANK MENLO EQUITIES

PGIM REAL ESTATE

Top Sales

Address Developer SF Completion

757 S ALAMEDA ST, LOS ANGELES ATLAS CAPITAL GROUP 425,131 Q1 2018

900 WILSHIRE BLVD, LOS ANGELES KOREAN AIRLINES/AC MARTIN PARTNERS 372,775 Q2 2017

10000 W WASHINGTON BLVD, CULVER CITY LBA REALTY 363,000 Q4 2017

700 CORPORATE POINTE, CULVER CITY IDS REAL ESTATE GROUP 278,247 Q2 2017

801 S BROADWAY, LOS ANGELES WATERBRIDGE CAPTIAL 955,561 Q3 2017

Under Construction/Renovation

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DOHENY EYE INSTITUTE

PACSHORE PARTNERS

LNR PARTNERS, LLC

TIER REIT, INC.

$179,000,000 547,302 $327

$110,000,000 150,608 $730

$110,000,000 130,150 $843

$83,000,000 396,000 $210

$52,500,000 117,859 $445

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© 2017 Avison Young Southern California, Ltd. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.

A Growing, Multinational Presence First Quarter 2017 / Office Market Report

Contact Information

Los Angeles - Downtown 555 S Flower St, Ste 3200 Los Angeles, CA 90071 Primary Contact: Ted Simpson ted.simpson@avisonyoung.com 213.935.7430

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Los Angeles - North 6711 Forest Lawn Dr Los Angeles, CA 90068 Primary Contact: Mark Evanoff mark.evanoff@avisonyoung.com 323.851.6666

Regional Managing Director:Chris Cooper - Corporate555 S Flower St, Ste 3200Los Angeles, CA 90071 chris.cooper@avisonyoung.com213.935.7435

Orange County - Irvine 2030 Main Street, Ste 150 Irvine, CA 92614 Primary Contact: Stan Yoshihara stan.yoshihara@avisonyoung.com949.757.1190

San Diego - La Jolla 4225 Executive Sqr, Ste 600 La Jolla, CA 92037 Primary Contact: Jerry Keeney jerry.keeney@avisonyoung.com858.201.7070

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A Growing, Multinational Presence

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Partnership. Performance.

Avison Young is the world’s fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 2,400 real estate professionals in 79 offices, providing value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family properties.

Avison Young at a Glance

Founded: 1978 Total Real Estate Professionals: 2,400

Offices: 79Brokerage Professionals: 900+

Property Under Management: 100 million sf

Transaction Services- Tenant representation, lease

acquisition and disposition- Investment acquisition

and disposition for ownersand occupiers

- Landlord representation—all property types—office,industrial, retail, build-to-suit,land and multi-family

Consulting & Advisory Services- Portfolio review and analysis- Valuation and appraisal- Benchmarking- Transaction management- Asset rationalization- Mergers and acquisitions- Workplace solutions- Acquisitions and dispositions- Property tax services

Debt Capital Services- Permanent & construction- Structured finance- Portfolio mark to market- Mezzanine & bridge

Enterprise Solutions- Integrated services coordination- Transaction management- Optimization strategies- Portfolio lease administration- Project coordination and

reporting

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