Torrance is located in the southern region of the South Bay, while the northern region includes Manhattan Beach and El Segundo, known for their tech, media, and entertainment sectors. By the end of 2023, the overall vacancy rate in the entire South Bay exceeded 25%. However, the office space market in Torrance was more stable, ending the year with just a 12% vacancy rate. El Segundo’s Class A office space commanded a premium of up to $1.50 more per square foot, exacerbating the situation near LAX.

In the first half of 2024, El Segundo faced significant challenges due to a mass exodus and financial troubles in the tech, media, and streaming sectors. Despite this, interest and demand for office space along Hawthorne Blvd and the 190th St. corridor at the 405 Freeway remain strong. This is due to the area’s amenities, competitive rental rates averaging about $1.50 less per square foot per month, and convenient freeway access.

While elements of a weak office market will persist through 2024, certain buildings, neighborhoods, and areas, such as Torrance, remain sound and stable. Sublease availability, except in large tenant spaces in the rent-hammered airport area, is lower than expected. Class A and even Class B buildings are retaining tenants and maintaining or even increasing rates. Lower rates may emerge as new landlords with less debt and a lower tax base step in to rescue troubled Class A properties, likely impacting all markets.

For the four years ending December 2023, the office market defied basic economic principles. However, some declines have begun this year and are expected to continue through the end of 2024.

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