Southern California led a statewide contraction in office stock over the past year, with Los Angeles, San Diego and Orange County together losing about 6.7 million square feet of inventory, according to The Registry’s analysis of Savills data, while Austin, Seattle and Dallas-Fort Worth kept adding space.
California’s office markets are getting smaller. Over the 12 months through the third quarter of 2026, all five of the state’s markets covered by Savills’ Market in Minutes reports reported less office inventory than a year earlier, while three of the four out-of-state markets in the same set kept growing. Southern California accounted for most of the decline.
San Diego had the largest drop. Its inventory fell from 65.1 million square feet in the third quarter of 2025 to 61.9 million square feet, a loss of 3.2 million square feet, according to Savills. The firm said roughly 2.7 million square feet of that came from obsolete Downtown buildings removed from inventory. Savills counts San Diego office buildings of 20,000 square feet and larger. By The Registry’s analysis of Savills data, the decline equals about 4.9 percent of the metro’s office stock, the steepest percentage drop of the nine markets reviewed.
Los Angeles had the second-largest drop in square feet. Its inventory fell from 214.9 million square feet to 212.1 million square feet, a 2.8-million-square-foot decline, according to Savills’ Los Angeles report. Orange County fell from 81.1 million square feet to 80.4 million square feet, down 700,000 square feet. In its outlook, Savills said limited new development and continued office conversions are expected to further reduce available supply in Orange County.
Together, the three Southern California markets lost about 6.7 million square feet of inventory in a year, by The Registry’s analysis of Savills data. Northern California is moving the same direction more slowly. San Francisco’s inventory fell from 91.7 million square feet to 90.4 million square feet, and Silicon Valley’s slipped from 85.8 million square feet to 85.0 million square feet, according to Savills.
Across all five California markets, inventory fell about 8.8 million square feet, from 538.6 million square feet to 529.8 million square feet, or about 1.6 percent, by The Registry’s analysis. Add Houston, where inventory slipped from 196.2 million square feet to 196.0 million square feet, and the six shrinking markets lost about 9.0 million square feet combined.
The growth markets are outside California. Seattle/Puget Sound added 3.1 million square feet, rising from 125.2 million square feet to 128.3 million square feet, according to Savills. Austin grew from 75.7 million square feet to 77.8 million square feet, and Dallas-Fort Worth from 219.0 million square feet to 219.9 million square feet. Those three markets added about 6.1 million square feet, by The Registry’s analysis, less than California alone lost.
The shrinking stock is showing up in availability, especially in Orange County. Availability there fell to 17.3 percent in the third quarter, down 330 basis points from a year earlier and 130 basis points from the prior quarter, according to Savills. Asking rents rose 2.1 percent from the second quarter to $2.89 per square foot per month, and Class A rents climbed 5.4 percent year over year to $3.12. Savills said competition for premium space is expected to intensify as availability declines.
Los Angeles is tightening as well. Availability fell to 26.5 percent, down 170 basis points year over year, while available sublease space dropped to 6.3 million square feet from 8.7 million square feet a year earlier, according to Savills. LA leasing reached 4.0 million square feet in the quarter, its highest level since 2019. The market has now recorded eight consecutive quarters of declining sublease supply.
San Diego shows the other side of the math. Because the obsolete Downtown buildings left the denominator, the remaining available space in Downtown counts for more. Downtown availability jumped 490 basis points to 35.8 percent, and countywide availability rose 40 basis points from the prior quarter to 21.0 percent, a move Savills attributed to the inventory removal rather than to new vacancy. Year over year, San Diego availability still edged down from 21.4 percent.
That is a reminder about reading inventory-driven numbers. Each Savills report notes that current and historical availability and rent data are subject to change due to changes in inventory. When a market removes buildings, the reported availability rate can fall or rise without a single tenant moving, depending on how much of the removed space was vacant and where it sat.
The Northern California markets are tightening mainly through demand. San Francisco availability fell 640 basis points year over year to 27.2 percent as leasing reached 3.9 million square feet in the quarter, and Silicon Valley availability fell 280 basis points to 21.8 percent, according to Savills. In Silicon Valley, Savills said declining sublease space and a limited construction pipeline should keep reducing excess supply.
For Southern California, the trend favors owners of well-located buildings that remain in the inventory. As obsolete buildings are removed from inventory, converted to other uses or bought by owner-users, as happened with 12220 Scripps Summit Drive in San Diego’s I-15 Corridor this quarter, the competitive set is shrinking. Savills expects Orange County supply to keep falling and LA rents to keep rising in submarkets with little available space, such as Century City, Beverly Hills and West Hollywood. The open question for landlords of older buildings is whether they leave the inventory on their own terms, through conversion or sale, or are left competing for tenants in a smaller, higher-quality market.
