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edbush Securities, a financial services firm based in downtown Los Angeles, is relocating its headquarters to Pasadena due to the changing nature of the office rental market. The pandemic has led to a significant contraction in occupancy rates, with many employees working remotely most of the time. As a result, Wedbush is downsizing from 100,000 square feet at Wedbush Center to about 20,000 square feet in an office complex on Lake Avenue.

    The firm's president, Gary Wedbush, said the move was influenced by the shift to hybrid work and the desire for a more collaborative office space. The new location will feature shared workspaces that can be used as needed, rather than assigned desks. About 70% of the office will be "hotel" space where employees can choose a workstation on days they are present.

    The move reflects a broader trend affecting downtown Los Angeles and much of the county, according to real estate brokerage CBRE. The Greater Los Angeles office market continues to search for its bottom, with overall vacancy rates exceeding 30% in downtown LA. This is triple the amount considered healthy, and companies are adapting to new work models by leaving behind large chunks of office space.

    Wedbush Securities' move will take place in the first half of 2025. The firm's decision underscores the continued struggles of the office rental market and broader vulnerabilities in commercial real estate throughout LA County. A recent report by NAI Capital noted a sharp decline in sales volume and a rise in real estate cap rates, which could be a low point in the real estate cycle for property sales.

    The commercial real estate market is being further limited by taxes and government fees, particularly Measure ULA, the property transfer tax in Los Angeles. This has contributed to a nearly 40% year-over-year drop in sales of office, retail, industrial, and multifamily properties.