Westside Office Market Report – Q2 2025

July 2, 2025

Tenants Shift Focus to Quality in a Rebalanced Market

The office market on Los Angeles’ Westside remains one of the most dynamic and closely watched segments in Southern California. As of the second quarter of 2025, leasing decisions are increasingly being driven by one factor: quality. Tenants are targeting upgraded, well-located space, while landlords continue to adapt their strategies to attract and retain occupancy.

Rather than declining, the market is adjusting to new workplace realities. For tenants and investors alike, this is a period of opportunity for those positioned to act with clarity.

Vacancy Rates Stabilise as Market Repositions

Office vacancy in the Westside submarket remains elevated at 19.9 percent. However, this figure has remained consistent over the past year, suggesting that the worst of the softening has already passed.

Key Q2 2025 indicators:

Net absorption (12-month): negative 118,947 square feet
Year-to-date deliveries: 163,940 square feet
Available sublease space: 2.3 million square feet

Leading Class A properties such as One Westside, The Pen Factory, and Lumen West LA continue to attract consistent interest, while older Class B and C buildings are experiencing longer downtime without significant renovation.

Leasing Behaviour: Focused on Flexibility and Location

Over the last 12 months, approximately 1.2 million square feet of office leases have been signed in the Westside area. Tenants are no longer simply renewing or downsizing. Many are actively upgrading to premium space at better terms than would have been possible in previous years.

Leasing preferences now include:

Shorter lease durations
Fully built-out or plug-and-play suites
Proximity to talent hubs and modern amenities

Notably, leasing momentum has returned in Century City, Playa Vista, and Santa Monica, where employers value both access to skilled labour and the quality of surrounding infrastructure.

Rental Rates and Incentives: Premium but Negotiable

Average asking rents in the Westside office market remain high at $5.59 per square foot (full service gross). However, the headline rate no longer tells the full story. Landlords are offering significant concessions to secure well-qualified tenants.

Recent trends include:

Negative rent growth of 0.5 percent over the past year
Increased tenant improvement allowances
Free rent periods and early-out clauses

This environment presents a unique window for tenants to secure trophy space under favourable terms, particularly in buildings that previously commanded a significant premium.

Investor Sentiment: Private Buyers Take the Lead

Investor activity has shifted from large institutions to owner-users and private capital groups. Cap rates have softened to 6.9 percent, and the average price per square foot now sits at $642.

A recent sale of note:

2101 El Segundo Boulevard sold for $10.3 million, reflecting a 6.2 percent cap rate

Properties with potential for repositioning into creative office or mixed-use remain particularly attractive, especially in zoning districts that support flexibility in future use.

Market Takeaways for Tenants and Buyers

This is not a distressed market. It is a market in transition. For tenants, Class A assets are now attainable through negotiation, with many landlords willing to customise terms to secure occupancy. For buyers, pricing has recalibrated, and prime-located assets with long-term potential are returning to the table.

If you have been waiting for the right time to enter or upgrade in the Westside office market, conditions now favour strategic decision-makers.

Talk to a Local Office Market Specialist

Lancelot Commercial offers detailed market knowledge and customised solutions across West LA. Whether you’re seeking office space or reviewing investment opportunities, we can help you secure the right outcome.

Phone: 310 839 3333

Browse our current properties here

Serving Century City, Culver City, Playa Vista, Santa Monica, and West LA.

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