O
ffice tenants are abandoning Downtown Los Angeles for more upscale areas like Century City, Pasadena, and El Segundo. According to CBRE Executive Vice President Jeffrey Welch, many companies have shifted half or more of their employees from Downtown offices to outlying areas while maintaining a presence in DTLA. This trend is driven by concerns over safety, with Welch stating that as long as safety remains an issue, Downtown will struggle.

    Welch notes that the traditional 75/25 split between Downtown and the Westside has flipped, with many companies now having 75% of their employees in Century City and just 25% in Downtown. He describes this as a "quiet leave" or downsizing of Downtown offices, where companies are not abandoning the area entirely but rather reducing their footprint.

    Recent examples include Wedbush Securities, which is moving from its Downtown office to Pasadena next year, and law firm Sidley Austin, which has downsized its Downtown presence by moving to a smaller office in Two California Plaza and a new tower in Century City. Welch attributes this trend to companies prioritizing safety when making office decisions.

    Century City, Pasadena, and El Segundo are seen as safer alternatives to Downtown, with amenities and environments that appeal to employees. While Downtown still has advantages, such as its central location and access to public transit, the area is struggling with high vacancy rates, including 32.8% last quarter and nearly 1.2 million square feet of negative net absorption.