The rapid spread of COVID-19 throughout the United States – and associated policy responses – has pushed the nation and the region into a recession. The crisis is still ongoing, and the pandemic’s many dimensions (medical, political, economic, etc.) complicate efforts to project the long-term impact on the region’s office market. Nevertheless, Southern California has experienced periods of economic stress before, and it is these times of recovery that offer valuable lessons.

 

Los Angeles – the nation’s second largest metropolitan region – is supported by a highly diversified regional economy. The economic base, which broadly mirrors that of the nation as a whole, has traditionally tempered the degree to which economic swings are experienced locally – muting both the upswings and the downswings relative to other regions with highly concentrated economies (e.g. San Jose and technology or Orlando and tourism/hospitality). The region’s commercial real estate though – economic fundamentals notwithstanding – has consistently outperformed, driven by structural supply limitations, an unparalleled talent base, and high premiums for liquidity.