L. A. Area Office Rent Rates Could Double by 1990: Report

If the trends of 9% average annual rental increases continue through the decade, office rental rates in Los Angeles County could reach $48 a square foot a year by 1990--double the current rates.

This is the view of Wade Lamming, president of Fuller Commercial Brokerage Co., Century City, a unit of A. E. LePage Real Estate Services Ltd., Toronto.

“Office rental rates didn’t escalate in a steady, orderly fashion and, in fact, declined in some years and exploded in others,” he said. “The same uneveness is expected in the next six to seven years.”

Looking ahead to next year, he predicted that rental rates for Class A office space in Los Angeles County--now at $18-$25 a square foot--should increase sharply to $23-$30 by the second half of 1985.

Rental rates should hold steady for the first six months of 1985, then increase from 20% to 40%, depending upon location, he said.

“The major causes are increased demand returning to the marketplace and an absorption of low-cost space in older buildings that has been keeping a lid on rental rates,” Lamming added.

Currently, the county’s office market is experiencing a 16% vacancy rate. The survey indicates that an absorption of 6-7 million square feet can be expected in 1985, creating a 14% vacancy rate.