The SoCal Office "Recovery" Story Everyone's Telling You (And What They're Leaving Out)
If you've read a commercial real estate headline in the last month, you've seen some version of "office leasing is back." Greater LA tenants signed almost 4 million square feet of office space in Q2, up 15% from the prior quarter and 8% year over year. That's the highest quarterly total in years. Feels like good news, right?
Here's what those headlines don't lead with. Overall office availability across Greater LA is still sitting at 26.6%. That's down a measly 130 basis points from a year ago. One in every four square feet of office space in this market is empty, and the "recovery" barely moved that needle. Direct asking rents actually dipped slightly quarter over quarter. And landlords are still handing out concession packages near historic highs, meaning the rent tenants actually pay is well below what's quoted on the listing.
Dig one layer deeper and the story gets more interesting. Most of that leasing "surge" is coming from renewals and relocations, not new demand walking through the door. Translation: existing tenants shuffling around, not the market growing. When a dual-agency shop reps the landlord on one deal and the tenant on the next, guess which version of this story they're leading with when your renewal comes up. "Market's tightening, better lock it in now" reads a lot different when you know availability is still north of 25%.
The regional picture backs this up. Sublease space across SoCal fell 8.7% quarter over quarter and dropped 23.5% year over year, which is genuinely a good signal, the wave of tenants dumping space is finally receding. But total leasing volume across the region actually fell 23.8% quarter over quarter. Occupiers are being deliberate, not desperate. That's not a market where tenants have lost their leverage. That's a market where tenants still hold it, if they know where to look.
Three submarkets worth watching if you're a decision maker sizing space in the next 12 months:
San Diego industrial just posted its strongest leasing quarter in four years. Tenant requirements have doubled since late 2024 to 5.7 million square feet, with 17 active requirements above 100,000 square feet. Vacancy countywide dropped to 6.8%. If you're in industrial and thinking about waiting this out, that window is closing. Otay Mesa is the exception, vacancy still sits at 15.7% with more supply coming.
San Diego office, on the other hand, is "active but selective." Kearny Mesa, the College Area, Del Mar Heights and Carmel Valley are seeing the deal flow. Downtown San Diego has quietly turned a corner, about 80% of downtown office buildings have changed hands and the ownership churn that's dogged that submarket for years is mostly done.
South Bay LA is the sleeper. El Segundo posted the strongest positive net absorption in the submarket, leasing activity is running 14.2% ahead of the 2025 quarterly average, and sublease availability has shrunk for three straight quarters. Quietly one of the healthiest pockets in the county right now.
Here's the takeaway for anyone occupying space in this region. The market isn't dead and it isn't roaring back either. It's uneven, submarket by submarket, and the people telling you it's "back" usually have a listing that benefits from you believing that. I spent years on the ownership side managing buildings for groups like Kilroy and TIAA-CREF before I started representing tenants exclusively. I've seen how these headlines get built. Read the vacancy number, not just the leasing volume number, before you believe anyone's version of "the market is back."
Thinking about a renewal, relocation, or new lease in the next 12 months? Worth a conversation before you sign anything off a headline.
Jamal Brown
Principal
The Ocean Company