Office Rents in Downtown LA Continue to Contract Amid Pandemic
Wedbush Securities to Move to Pasadena, Downsize HQ
One of downtown Los Angeles’ familiar tenants is pulling up stakes as the office rental market continues to contract from shrinking occupancy rates fueled by the pandemic. Financial services firm Wedbush Securities has begun its move from a prominent office tower to Pasadena, where it will occupy much smaller offices meant to accommodate employees who now work remotely much of the time.
The Move
The firm is leaving behind Wedbush Center, which overlooks the Harbor Freeway and sports two signs on top bearing the company name. Wedbush has been headquartered in the Wilshire Boulevard building since 2001, and its lease expires next year. "It’s a big deal, a very big decision for the firm," President Gary Wedbush said of the move. "The pandemic and COVID created a different kind of office for us."
New Office Design
With most employees required to be in the office only a third of the time, Wedbush is creating an office oriented toward shared workspaces that can be used as needed by various employees instead of assigned desks, he said. About 70% of the office will be considered "hotel" space where employees can choose a workstation on days they are present, while the remaining 30% will be offices for financial advisors and others who need privacy to meet with clients.
Amenities and Location
The move was also influenced by the changed nature of downtown’s financial district since thousands of office workers departed during the COVID-related shutdown and probably won’t return again in pre-pandemic numbers. Many shops and restaurants remain closed, and office tenants have said the streets feel less safe than they used to. Although Wedbush said "downtown has been fantastic for us," other locations have become more attractive. "There are places like Pasadena that seem to have recovered more fully from the pandemic than downtown Los Angeles has. That was a part of the decision-making" to move.
Market Trends
The firm’s move reflects a trend that has been affecting downtown and much of Los Angeles County for the last few years, real estate brokerage CBRE said in a recent report on office leasing. "The Greater Los Angeles office market continued its search for the bottom" in the third quarter, CBRE said, as both tenants and landlords "navigate the ongoing supply and demand imbalance exacerbated by the shift to hybrid and remote work."
Office Vacancy Rates
Companies adapting to new work models are leaving behind large chunks of office space, and the change is particularly noticeable downtown, where CBRE said overall vacancy rates are more than 30%, triple the amount considered to be a healthy balance between tenant and landlord interests.
Conclusion
The decision to move to Pasadena is a significant one for Wedbush Securities, and its approach to a new office design reflects a changing market. As the pandemic continues to reshape the way people work, office spaces are evolving to meet new demands. This shift is having a profound impact on the commercial real estate market, with office vacancy rates skyrocketing and landlords struggling to retain tenants.
Frequently Asked Questions
Q: Why is Wedbush Securities moving to Pasadena?
A: To accommodate a changed work environment and to take advantage of the city’s more favorable post-pandemic recovery.
Q: How much office space will Wedbush Securities occupy in Pasadena?
A: About 20,000 square feet in an office complex on Lake Avenue in one of Pasadena’s leading commercial districts.
Q: Why are office vacancy rates in downtown LA so high?
A: The pandemic and shift to remote work have led to a surplus of office space in downtown LA, making it difficult for landlords to find tenants.
