Downtown LA’s Central Business District is constantly evolving to meet new demand and fresh market challenges. To better drive your commercial real estate investment efforts, we’ve drafted a data-driven look at the area’s performance as of mid-2025. If you have any questions about these stats, don’t hesitate to reach out to one of our professionals. Let’s dive in!
Office Vacancy Rates Are Still Surging – Just Not As Much
We’ve been talking about it all year (even longer, actually), but office vacancy rates are continuing to stay high across the nation… and Downtown’s Central Business District is no exception. Q4 2024 wrapped up with a 33.3% office vacancy rate according to CBRE, underscoring the relaxed demand for office space going into the new year. But even amidst some hopeful projections, LA’s Downtown area held its ground with a 24.2% office vacancy rate in Q1 2025 and an only slightly better 24.1% rate in Q2.
Could Demand Be Slowly Recovering?
Keeping those vacancy rates in mind, it should come as no surprise that supply continues to exceed demand in LA’s Central Business District in 2025. Q2 closed out with a negative net absorption of more than 596,000 sqft, although that’s for the Greater Los Angeles area as a whole. Still, this is a markedly better picture than in Q1 of this year, when Greater LA showed a negative net absorption of over 1 million sqft. It’s a little early to pop the champagne, so we’ll just say that, if this is, in fact, a recovery, its legs are still understandably shaky.
Low Foot Traffic in LA’s Central Business District
On the heels of reports touting San Francisco’s return-to-office rate outpacing LA’s, it’s worth noting that LA’s Central Business District doesn’t have close to the foot traffic that the rest of the country is enjoying. As of July 2025, LA’s foot traffic is down a staggering 34.6% from the pre-pandemic days of 2019. San Francisco was just a hop ahead, down 34.2% from the same time. And the national average is down a still considerable 21.8%. With hybrid and remote work very much a reality, especially in metropolitan areas, could this be the new norm?
Repurposing Commercial Space
Another hot topic on the JohnHart CRE blog, office space conversion continues to produce unique investment opportunities years after we first reported on it. We’re obviously not alone in this assessment. Earlier this year, Axios highlighted the increase in office space conversions, while emphasizing Los Angeles as one of the predicted leaders in the movement (potentially due to our underutilized Central Business District). Additionally, The New York Post reported that, since 2021, the country as a whole has produced a 357% increase in office-to-residential repurposing projects. That’s 19,462 planned conversions in the country’s largest metro areas.
Exciting Investments in LA’s Central Business District
While these stats may make the city’s Central Business District sound like a decaying husk, there’s still plenty of investment energy behind the area. It just may not be where you’re expecting it. For example, the “Bringing Back Broadway” initiative has garnered close to $1 billion in investment with an aim to preserve the Central Business District’s historic heart. The Broadway corridor is attracting a flurry of opportunities ranging from retail to hospitality, but also includes some residential and office space developments – and, yes, some office repurposing projects.
Finding the Rhythm of Real Estate Investment
It’s important to remember that commercial real estate is often cyclical. What’s down today could be the next decade’s hottest commodity. But timing is integral, so finding the rhythm between the market and your budget can be a lucrative talent. We’ve seen the Central Business District in better days. We’ve also seen it bounce back from worse. If you’re interested in this area, your best option is to reach out to one of our CRE experts so you can see the possibilities through the most knowledgeable lens.
