As employers figure out their in-office versus remote work schedules, and as the general demand for office space has dwindled, some companies are being lured to Los Angeles’ quiet upstairs neighbor – the Valley.

Despite overall office market struggles, the San Fernando Valley, Tri-Cities and Ventura submarkets are all faring quite well – outperforming the overall Los Angeles County vacancy rate of 24% – according to CBRE, which recently released its second quarter Greater Los Angeles office figures.

Ventura County, for example, had one of the lowest vacancy rates in the area, ending the quarter at 17.2%.

“Downtown Los Angeles is historically known to have generally a higher vacancy,” Natalie Bazarevitsch, a senior vice president at CBRE Group Inc. specializing in office properties, says. “And the suburbs, which are smaller markets, can absorb and also have a diversity of tenant base.”

According to the survey, vacancies have swelled in the downtown and central business district submarkets while the suburbs have performed slightly better given the more relaxed adoption of hybrid work.

And not only does the Valley have one of the lowest vacancy rates as a whole, but it also has one of the lowest class A asking rates.

This has resulted in a number of companies fleeing to the suburbs whereas landlords in the urban core continue to grapple with oversupply.

Mutually beneficial

With many employers still wanting to maintain an office presence, some are rethinking their physical footprint, assuming convenience plays a big role in enticing employees to come back into the office.

“The voice of the employee has been pretty strong, as evidenced by the work from home or hybrid models that we’ve experienced, but we are starting to see that pendulum shift a little bit with power being a little more firmly held by the employer,” Bazarevitsch says.

From an employer’s standpoint, suburban office markets typically offer lower lease rates, greater access to labor, more easily accessible office buildings, as well as that usually feature a greater parking ratio.

For companies that have their downtown offices sitting half empty, reevaluating their location may be most economical.

But the suburbanization happening in the office sector can be very beneficial to employees too – oftentimes cutting commutes and making the in-office experience more tangible for those considering the pros versus cons.

“It’s actually a meritorious relationship between employer and employee,” Bazarevitsch says. “Right now, a lot of the employees actually are grateful to be moving out of some of the more dense, urban locations where, if they have to pay for their own parking, it’s very expensive or off-site so they have to walk a lot and (it poses) a safety issue. Homelessness has remained a constant. There’s a lot of mutual benefit in this move for the employer and the employee.”

Woodland Hills is the largest office submarket in the Valley, featuring an 18.2% overall vacancy rate. Valencia and Encino follow with 28.1% and 18.9% vacancy rates respectively. Panorama City is the smallest office submarket, boasting only a 1.7% overall vacancy rate, according to CBRE data.