The office and industrial real estate sectors continue to improve for Southern California landlords, a report said, but high office vacancy will remain common for the foreseeable future as businesses put more workers into less space.
The regional economy has strengthened the past year and enabled some businesses to hire more workers, according to USC’s annual Casden office and industrial property forecast.
That has resulted in higher occupancy and rising rent for industrial buildings, while office landlords are seeing rising occupancy and smaller declines in the amount of rent they can charge.
“We predict office market rents to stabilize in as little as six months, but a sustained recovery could be many years off,” said Casden report author Tracey Seslen.
Office occupancy probably won’t return to pre-financial crisis levels until some of the region’s office buildings are taken out of commission or converted to other uses.
“A paradigm shift in the way tenant firms use office space will force landlords and developers to rethink their investment strategies even as the economy improves,” she said.