Looking for Bargains on Office Space? Prepare for Sticker Shock. Rents Are Higher Than Before COVID

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

Looking for Bargains on Office Space? Prepare for Sticker Shock. Rents Are Higher Than Before COVID

Nearly a year into the worst pandemic in a century, Los Angeles companies expecting to snap up office space on the cheap may be disappointed.

L.A. office rents have held steady or even gotten pricier since COVID, even as more space has become available as most employees continue to work from home.

"I honestly thought rents would have dropped by now," said Michael Soto, research director at the brokerage Savills Inc. "For a lot of tenants, they are still seeing a bit of sticker shock that prices haven't dropped yet."


Despite a 22% vacancy rate, the average asking L.A. office rent at the end of 2020 creeped up to $44.88 a square foot from $42.12 at the end of 2019, according to Savills. In West L.A., where most tech companies are located, rent inched up to $62.96 from $59.58 even as vacancy also increased to 21% from 14%.

"It's counterintuitive," said Soto. "Usually when availability goes up, rent goes down. But rents have been sticky."

Soto credits the steadiness in prices to landlords holding firm on pricing, anticipating that workers will return to the office in the second half of the year.

"We are in a wait-and-see approach to see who blinks first," Soto said.

Even though overall demand for office space in L.A. has fallen, it is still doing much better relative to other major cities, according to the VTS Office Demand Index (VODI), a real time tracker of private commercial real estate data. It found demand in L.A. was down only 15% in January compared to the same month in 2020. By comparison, demand plummeted 52% in San Francisco and 68% in New York.

One reason why is the Netflix effect. Through the pandemic, streaming services continued to aggressively expand their L.A. footprint, which helped drive up rent for the market as a whole.

"These are companies that are flush with capital," Soto said. "They have taken advantage of drop off in leasing activity to expand to get favorable terms."

Some large tech companies – such as Salesforce, Zillow, Twitter and Dropbox – have said remote work will be permanent. But they are still in the minority as most companies plan to return to the office, even if they will not require all their workers to be present all the time.

Just one in 10 companies expect all employees to return to their pre-pandemic work arrangements, according to a recent survey conducted by the National Association for Business Economics. A dot.LA survey of top L.A. VCs conducted in December found 28% do not expect employees to ever go back, but 44% expect employees to return during the second half of this year.

Jamie Montgomery, co-founder and managing partner of March Capital, said he never considered giving up his venture firm's Santa Monica office and that he's hopeful his staff can return in a few months.

"We have a relatively young team and they like the social interaction," Montgomery said. "I think we're in what I would call a creative industry where you kick around ideas and you come up with the best ideas. I mean, I'm not going to sit here at my desk and be a brilliant investor."

Montgomery says he was able to buck the trend of higher rents when he signed a new lease in December, lowering his rent to where it was five years ago. He was eager to get the deal done before prices increased.

"I thought if we waited too long we probably would miss that window," he said.

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Los Angeles’ Wage Growth Outpaced Inflation. Here’s What That Means for Tech Jobs

Samson Amore

Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College and previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.

Los Angeles’ Wage Growth Outpaced Inflation. Here’s What That Means for Tech Jobs

Inflation hit cities with tech-heavy workforces hard last year. Tech workers fortunate enough to avoid layoffs still found themselves confronting rising costs with little change in their pay.

Those national trends certainly touched down in Los Angeles, but new data from the Bureau of Labor Statistics (BLS) show that the city of angels was the only major metro area that saw its wage growth grow by nearly 6% while also outpacing the consumer price index, which was around 5%. Basically, LA was the only area where adjusted pay actually came out on a net positive.

So, what does this mean for tech workers in LA County?

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samsonamore@dot.la

Energy Shares Wants to Offer You a Chance to Invest in Green Energy Startups

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

Energy Shares Wants to Offer You a Chance to Invest in Green Energy Startups
Photo by Red Zeppelin on Unsplash

The Inflation Reduction Act contains almost $400 billion in funding for clean energy initiatives. There’s $250 billion for energy projects. $23 billion for transportation and EVs. $46 billion for environment. $21 billion for agriculture, and so on. With so much cash flowing into the sector, the possibilities for investment and growth are gigantic.

These investment opportunities, however, have typically been inaccessible for everyday retail investors until much later in a company’s development–after an IPO, usually. Meaning that the best returns are likely to be captured by banks and other institutions who have the capital and financing to invest large sums of money earlier in the process.

That’s where Pasadena-based Energy Shares comes in. The company wants to help democratize access to these investment opportunities and simultaneously give early-stage utility-scale energy projects another revenue stream.

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How These Ukranian Entrepreneurs Relocated Their Startups to LA and Found Success

Aisha Counts
Aisha Counts is a business reporter covering the technology industry. She has written extensively about tech giants, emerging technologies, startups and venture capital. Before becoming a journalist she spent several years as a management consultant at Ernst & Young.
How These Ukranian Entrepreneurs Relocated Their Startups to LA and Found Success
Joey Mota

Fleeing war and chasing new opportunities, more than a dozen Ukrainian entrepreneurs have landed in Los Angeles, finding an unexpected community in the city of dreams. These entrepreneurs have started companies that are collectively worth more than $300 million, in industries ranging from electric vehicle charging stations to audience monetization platforms to social networks.

Dot.LA spent an evening with this group of Ukrainian citizens, learning what it was like to build startups in Ukraine, to cope with the unimaginable fear of fleeing war, and to garner the resilience to rebuild.

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