DTLB Snapshot - Office Market Report Q2 2016

OFFICE MARKET REPORT - Q2 2016

SUMMARY DOING BUSINESS...

This report contains the most recent economic indicators DTLB saw 47 new business licenses registered in the
available for Downtown Long Beach (DTLB). According to
the most recent indicators, Downtown Long Beach economic Q2. Overall, approximately 1,500 businesses in DTLB.
conditions continued to improve, but at a slightly slower rate
than previous quarters. Office vacancy rates declined and OpenCounter
average lease rates increased as employment expanded.
The City of Long Beach launched OpenCounter, a web-
MARKET OVERVIEW based program that set to help streamline the City’s
permitting process.
The DTLB office market dipped slightly in Q1 after ending 2015
on a strong note. However, the market in Q2 appears to a have www.long-beach.opencounter.com
recovered a bit with vacancy dropping 100 basis points from
16.0% in Q1 to 15.0%. Bizport

Rents continue to trend upward with an overall average of $2.29 A state of the art business portal in partnership with Code
per square foot. In the last five years, DTLB office rents have for America, creating as one-stop shop for entrepreneurs,
increased by 12%. is available for early testing.

While class A product still commands the highest rents at $2.84/ http://bizport.longbeach.gov/
SF, demand for class B and C product, continues to grow as
vacancy levels dip below 15%. In addition, as Class B product CSULB OFFICE OF ECONOMIC
continue to undergo renovations to attract creative use office RESEARCH SURVEY DATA
tenants, vacancy rates are likely to continue to decrease.
The Downtown Long Beach Associates partnered with CSULB’s
Total year-to-date leasing activity equates to 118,863 square feet Office of Economic Research (OER) to survey Downtown residents
in which Q2 saw just 37,467 SF of office space leased, a 54% and businesses, the following results illustrate the perception
decrease from Q1 and down 47% from a year ago. However, businesses have of operating in DTLB.
net absorption for Q2 was as 43,430 SF. As leasing activity and
net absorption for Q2 trended upward, this suggests that the
market is beginning to stabilize a bit.

TOTAL INVENTORY 4,311,686 64%
TOTAL VACANCY 15.0%
Q2 NET ABSORPTION 43,430 Respondents agree the
YTD NET ABSORPTION -9,430 DLBA events are good
DIRECT AVG. ASKING RENT $27.45 for business
12-MONTH RENT DELTA -.08%
TOTAL UNDER CONSTRUCTION 0 63%
TOTAL PRE-LEASED 0
Respondents agree the
DLBA is an important
advocate for DTLB
business community

GRAPHS

The graphs below illustrates the 5-year trend for net absorption, vacancy rate, leasing activity, and direct average asking rent. While quarter to
quarter comparisons can show varying positive and negative fluctuations, historical trends provide a holistic approach and highlight improving
conditions in the DTLB office market.

TOTAL NET ABSORPTION (SF) TOTAL VACANCY RATE

16.9%

16.2%

16.0%

15.7%

15.0%
14.8%

2011 2012 2013 2014 2015

HISTORICAL LEASING ACTIVITY (SF) DIRECT AVG ANNUAL ASKING RENT (PSF)

716,285 $27.66
$27.45
324,663 393,976
192,034 307,235 $26.79

118,863 $25.63

$25.41 $24.60

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

CREATIVE CLASS FEATURE

HIGHLIGHTING CREATIVE SPACES IN DTLB

Let’s be frank: tech companies, “As a broker, it is becoming LONG BEACH AIRPORT
ad agencies, designers, and other increasingly difficult to lease spaces
creative users crave office spaces that lack what the new professional Long Beach Airport (LGB) has been ranked by
that reflect their creative processes. generation is seeking,” said Toliver the U.S. Department of Transportation as one of
Morris of William Morris Commercial, the five lowest-cost airports in the nation. LGB
The influx of entertainment-oriented Inc. . “And what they are desiring serves more than 3 million passengers annually.
tech companies into SoCal—from is more connectivity, more visibility, The Long Beach Airport has undergone a massive
gaming firms to streaming services— more openness. Building owners renovations that has made travel easier for both
to design firms—from architectural to throughout the Downtown aren’t causal traveling and business traveling. The
interior—has prompted office building just catching onto this; they’re recent addition of services provided by Southwest
owners in DTLB to reevaluate their actively revamping their spaces to to the airport has expanded both the reach and
spaces. accommodate this creative class of number of daily flights. Southwest began service
professionals.” out of LGB on June 5 and offers four flights a day
to Oakland. In August, JetBlue will begin nonstop
The 4.3M square feet of office market service to Reno, and will expand their service to
in DTLB shows an 18% vacancy in Oakland, San Francisco and Las Vegas, adding
the first quarter of 2016, according to an additional daily flight to each destination. Lastly,
a report by Transwestern, performing in September, flight times between Long Beach
better than the neighboring South and Sacramento will be adjust to accommodate
Bay market. customers to make day trips between the two
cities.
Even better? Rates.
• Ranked by Conde Nast among the “Top 10
Take a glance at 100 W Broadway, While new companies can expect to Business Travel Airports”.
currently underway to become its pay incredibly hefty rents, particularly
own creative office campus with a if they want to be in Santa Monica or • Operates 41 commercial and 25
complete renovation of the building DTLA, the two neighborhoods that commuter daily flights.
originally built in 1988. Ditching now offer the most expensive office
the fountain in the courtyard and rates in the county, DTLB offers what • Wi-Fi access - with free Wi-Fi access a
austere lobby, the building will many are seeking.
have an outdoor hangout area that major plus (fast, reliable, easy-to access).
encourages gathering and idea- “Office space is disappearing quicker
sharing with an open-air lobby that and quicker in DTLB because people • Ample recharging stations and outlets
blends indoor and outdoor elements. are catching onto what it has to
Add this to the building’s in-operation offer,” Morris said. “You have some for phones and laptops.
bike share program, upgraded office of the best rates in the region paired
spaces which open the ceilings and with accessibility to major transit, a • Airport contains 7 quality restaurants
exposed concrete while ditching the waterfront, walkability, and bikability.
cubicles and neon lighting. It’s an unquestionable win-win.” that provide a glimpse the local cuisine.

42% 43years
old
of DTLB workforce
holds a Bachelor’s is the average age
degree or higher. of DTLB workforce

DTLB MAP

Maine Ave 9th St
Daisy Ave8th St
Magnolia Ave
Chestnut Ave
Cedar Ave
Pacific Ave
Pine Ave
Locust Ave
Long Beach Blvd
Elm Ave
Linden Ave
Atlantic Ave
Lime Ave
Olive Ave

MLK Jr. Ave

7th St 25
6th St 24
5th St
Golden Ave

4th St

28

3rd St 19 The Promenade 20
27
29 4 17 18
26 16
Golden Shore Broadway 3 Alamitos Ave
1st St Ocean Blvd 21
1
2
Ocean Blvd
23
14 9 6 22 15

W Seaside Way
y
S. Pine Ave E Seaside Way

13 12 11 Aquarium Wa CLICK FOR A
10 DETAILED LIST

Queensway Shoreline Dr

SIGNIFICANT LEASE TRANSACTION Q2 TOTAL % VACANCY BY SPACE TYPE

DATE LOCATION SF ASKING RENT 18.0%
6/29/16 111 W OCEAN BLVD 4,049 $33.00 14.3%
6/28/16 130 PINE AVE 7,500 $21.00 4.1%
6/17/16 100 OCEANGATE ST 5,000 $23.40
5/25/16 100 OCEANGATE ST 2,623 $27.60
5/4/16 1 WORLD TRADE CENTER 1,356 $33.00
5/3/16 444 W OCEAN BLVD 7,837 $25.20
5/1/16 555 E OCEAN BLVD 710 $20.40
4/12/16 444 W OCEAN BLVD 4,536 $27.00
4/12/16 44 W OCEAN BLVD 570 $25.20

Looking to invest in DTLB? Visit DTLB.org for more economic resources, or email [email protected]

DTLB Snapshot: Retail Report will be issued October 15, 2016