The medical office sector in Los Angeles is showing signs of recovery, though challenges remain.
A recent JLL report reveals that the vacancy rate for outpatient medical offices dropped to 9.6% in Q2, marking its lowest point since 2019. Sublease vacancy also remained low, staying under 1%.
Among LA submarkets, Downtown LA posted the highest vacancy at 23.7%, followed by Santa Clarita Valley (15%), Conejo Valley (12.1%), and Antelope Valley (12%). On the other hand, Mid-Wilshire (5%) and Mid-Cities (5.8%)recorded the tightest vacancy rates.
Net absorption in Q2 was positive at 28,670 square feet, with the Westside submarket leading at 36,411 square feet. Year-to-date, LA’s total net absorption stood at 34,875 square feet.
However, the sales market continues to struggle.
JLL reported that medical office sales in LA totaled $111.2 million in the first half of 2023, an 80% decline from 1H 2022. Sales volume dropped further in 1H 2024, with just $62 million in transactions, nearly 50% lower than the previous year’s already low levels. Nationwide, Q2 saw the lowest medical office sales volume since early 2016.
Rental rates also softened, with average asking rents in LA at $3.61 per square foot—a 3% decrease since late 2023. Antelope Valley had the lowest rents at $1.86 per square foot, followed by Santa Clarita Valley ($2.43) and San Gabriel Valley ($2.67). The Westside commanded the highest rents at $4.63 per square foot.
Despite improving occupancy, the LA medical office market remains a mixed bag as sales and rental rates struggle to gain momentum. Get in touch with us to do a full evaluation on your property.