logo redirect pin user minus plus fax mobile-phone office-phone data envelope globe outlook retail close line-arrow-down solid-triangle-down facebook globe2 google hamburger line-arrow-left solid-triangle-left linkedin wechat play-btn line-arrow-right arrow-right solid-triangle-right search twitter line-arrow-up solid-triangle-up calendar globe-americas globe-apac globe-emea external-link music picture paper pictures play gallery download rss-feed vcard account-loading collection external-link2 internal-link share-link icon-close2
United States
  • Global
  • United States
  • Angola
  • Argentina
  • Australia
  • Austria
  • Bahrain
  • Baltics
  • Belgium
  • Brazil
  • Bulgaria
  • Cambodia
  • Canada
  • Chile
  • Colombia
  • Czech Republic
  • Denmark
  • Egypt
  • Finland
  • France
  • Germany
  • Greece
  • Hong Kong
  • Hungary
  • India
  • Indonesia
  • Ireland
  • Israel
  • Italy
  • Japan
  • Jordan
  • Kazakhstan
  • Kenya
  • Korea
  • Kuwait
  • Latin America
  • Luxembourg
  • Mainland China
  • Malaysia
  • Mexico
  • Morocco
  • Netherlands
  • New Zealand
  • Norway
  • Oman
  • Pakistan
  • Panama
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Romania
  • Russia
  • Saudi Arabia
  • Singapore
  • Slovakia
  • South Eastern Europe
  • Spain
  • Sweden
  • Switzerland
  • Taiwan
  • Thailand
  • Turkey
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • Venezuela
  • Vietnam
Log In
  • Global Intranet
  • myCBRE
  • Services
    • Business Segments

      Advisory Services

      Global Workplace Solutions

      Real Estate Investments

      • Advisory & Transaction Services
      • Capital Markets
      • Project Management
      • Property Management
      • Valuation & Advisory Services
      • Advisory & Transaction Services | Occupier
      • Client Strategy and Consulting
      • Facilities Management
      • Project Management
      • Development Services (Trammell Crow Company)
      • Flexible Space Solutions (Hana)
      • Investment Management (CBRE Global Investors)
    • Services for Investors
      • Appraisal Management
      • Debt and Loan Valuation
      • Federal Government Leases
      • Leasing & Advisory
      • Litigation Support
      • Net Lease Properties
      • Small Balance Lending
      • Corporate Capital Markets
      • Debt & Structured Finance
      • Going Concern Valuation
      • Investment Accounting & Reporting Solutions
      • Loan Portfolio Sales
      • Property Management
      • Telecom Advisory
      • Construction Risk Management
      • Energy & Sustainability
      • Host
      • Investment Banking
      • Loan Servicing
      • Property Sales
      • Valuations for Financial & Tax Reporting
    • Services for Occupiers
      • Business Transition & Move Management
      • Energy & Sustainability
      • Host
      • Location Analytics
      • Portfolio Services
      • Space Enablement
      • Client Strategy and Consulting
      • Expense Management Solutions
      • Labor Analytics
      • Location Incentives
      • Project Management
      • Workplace
      • Corporate Capital Markets
      • Facilities Management
      • Leasing & Advisory
      • Network Advisory
      • Real Estate Accounting
    • Asset Types & Specialties
      • Office
      • Aerospace and Defense
      • Data Centers
      • Golf & Resorts
      • Multifamily
      • Parking
      • Industrial & Logistics
      • Affordable Housing
      • Hotels
      • Land
      • Nonprofit
      • Self-Storage
      • Retail
      • Aviation Properties
      • Gaming
      • Manufactured Housing
      • Omnichannel
      • Senior Housing
    • Industry Sectors
      • Industrial & Logistics
      • Energy, Oil & Gas
      • Law Firms
      • Technology, Media & Telecom
      • Retail
      • Financial Services
      • Life Sciences
      • Data Centers
      • Healthcare
      • Student Housing & Education
  • Properties
  • Research & Insight
    • Latest National Research & Reports
      The Way Forward
      Weekly Insights
      Reopening the World's Workplaces
      COVID Resource Center
  • People & Offices
  • About CBRE
    • Careers
      Case Studies
      Corporate Information
      Corporate Responsibility
      Executive Leadership - Global
      Investor Relations
      Media Center
      Suppliers

Next

CBRE Recognized for Real Estate Industry’s "Best Use of Automation" by Realcomm
  • About CBRE
  • Media Center
  • Los Angeles Office Market Stands To Survive Next Big Recession Better Than Most Other U.S. Metros

Los Angeles Office Market Stands To Survive Next Big Recession Better Than Most Other U.S. Metros

September 7, 2016
  • Email
  • Share
  • Tweet
  • Share
Los Angeles – Sept. 7, 2016 – Los Angeles is likely to be one of the more resilient office markets during the next recession in part due to its increased diversification of its employment base and subdued new construction, while markets such as Boston, New York and Washington, DC are likely to be most affected, according to the latest research by CBRE Group, Inc.

In a “deep recession” scenario, a one-time 1.0 percent negative shock to employment growth, with both market sensitivity and current rent and vacancy conditions factored in, could lead in Boston to a temporary drop in rent growth of as much as 2.6 percent and a temporary vacancy rate increase of 515 basis points. In San Francisco, rent growth could slump by 3.4 percent and vacancies could jump 905 basis points, according to data from CBRE Econometrics Advisors. That compares with a zero percent rent drop and a 123 basis point increase in vacancy rates in Los Angeles under such a scenario, according to the data.

Investors in U.S. commercial real estate are wondering what this next recession will mean for commercial real estate performance. The effects of a deep recession on a market are related to three key factors, according to the report. They include the sensitivity of the area’s rents and vacancy to changes in its employment growth rate, current level of rents and vacancies in a market -- which determine its risk of negative adjustments -- and a market’s future employment growth.

“The Los Angeles economy is much different today than it was during the previous peak,” said Petra Durnin, head of research and analysis for CBRE Southern California. “Sectors that are much less cyclical, now represent much larger shares of total employment compared with previous decades.”

Cyclical sectors, such as manufacturing, finance, and construction, are playing a smaller part in Los Angeles’ employment base, while education and healthcare as well as leisure and hospitality have gained ground, she added.

Health & education services have increased to more than 16 percent of total current office employment from about 13 percent during the prior peak, according to a CBRE report. Leisure and hospitality employment jumped to 12 percent from less than 10 percent.

“So, fewer jobs shed means less vacancy disruption and less price depreciation, both positives for investors and developers,” she added.

Differences among markets and the factors that drive them are a crucial consideration in preparing investment portfolios for recessions, and in identifying investment opportunities when growth returns. The CBRE research modeled the effects of a major 2008-type recession on the 10 largest U.S. office markets, analyzing how rents and vacancy in each would respond to severe drops in employment. For the full report, click here.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
​​

Contact

nadja_brandt_768x582_2020
Nadja Brandt
Corporate Communications, Pacific Southwest
+1 213 6133627
  • Corporate Information
  • Corporate Responsibility
  • Case Studies
  • Media Center
  • About Us
  • Careers
  • People and Offices
  • Global Leadership
  • Investor Relations
  • Contact Us
  • Global Web Privacy and Cookie Policy
  • Sitemap
  • Terms of Use
  • United States Privacy Policy
  • Our Response to SCHREMS II
  • Twitter
  • Facebook
  • LinkedIn