Commercial Real Estate Trends 2025: What San Fernando Valley Businesses Need to Know

As we move through 2025, the San Fernando Valley’s commercial real estate market presents a landscape of opportunity for savvy business owners. Understanding current market conditions across the Valley’s key submarkets can help businesses make informed decisions about their real estate needs. Based on the latest market data and our extensive experience serving Los Angeles and Southern California, here’s what Valley businesses need to know about commercial real estate trends in Calabasas/Westlake Village, Sherman Oaks, Encino, and Woodland Hills/Warner Center.

A Tenant-Favorable Market

The San Fernando Valley is experiencing a decidedly tenant-favorable market across all major office submarkets. With vacancy rates elevated and landlords increasingly flexible on lease terms, businesses have significant leverage in negotiations. At Mazirow Commercial Inc., our recent successful lease negotiations demonstrate the potential for substantial cost savings—we helped an accounting firm in Encino achieve $150,000 in annual savings on their existing 8,800 square feet, while another Warner Center client saved over $350,000 annually by right-sizing to 4,800 square feet.

Sherman Oaks: Stability in a Changing Market

Market Overview

Sherman Oaks presents one of the more stable office markets in the Valley, with a 13.6% vacancy rate as of Q2 2025. The submarket contains 3.7 million square feet of inventory with average rents around $3.00/SF, significantly below the wider Los Angeles market average of $3.50/SF.

Key Trends

• Net absorption of 55,500 SF over the past 12 months indicates modest tenant demand
• -0.7% rent growth year-over-year reflects market softness
• 17.8% availability rate provides tenants with substantial options
• No new construction delivery, creating inventory stability

Business Implications

Sherman Oaks offers businesses a balanced market environment. Companies seeking quality space at competitive rates will find opportunities, particularly in 4 & 5 Star buildings where availability is higher. The market’s stability makes it attractive for businesses wanting predictable real estate costs without the volatility seen in other submarkets.

Encino: Premium Location, Competitive Pricing

Market Overview

Encino maintains its position as a premium Valley location with a 13.3% vacancy rate and approximately 5.3 million square feet of total inventory. Average rents of $35.00/SF remain well below the Los Angeles market average, offering exceptional value for the location quality.

Key Trends

• Strong net absorption of 99,900 SF over the past year demonstrates healthy tenant demand
• -0.6% rent growth indicates pricing stability
• 14.8% availability rate provides good selection for tenants
• Zero construction activity maintains market equilibrium

Business Implications

Encino represents an excellent opportunity for businesses seeking a prestigious address without downtown Los Angeles pricing. The healthy absorption levels suggest continued business confidence in the area, while moderate availability ensures competitive lease terms. Companies in professional services, particularly those requiring client-facing space, will find Encino’s combination of location prestige and competitive pricing compelling.

Mazirow Success Story: Encino Accounting Firm

Our recent lease renewal for an accounting firm in Encino demonstrates the market’s tenant-friendly conditions and the value of expert representation. The Mazirow Commercial team successfully renewed their existing 8,800 square feet of space, achieving $150,000 in annual cost savings compared to their expiring lease terms—a testament to our skilled negotiation expertise in today’s market environment.

Woodland Hills/Warner Center: Maximum Opportunity for Cost-Conscious Businesses

Market Overview

Woodland Hills/Warner Center presents the most tenant-favorable conditions in the Valley, with a 22.8% vacancy rate and nearly 10 million square feet of inventory. Average rents of $32.00/SF make this the most affordable major office submarket in Greater Los Angeles.

Key Trends

• Elevated vacancy at 22.8% creates maximum tenant leverage
• 26.6% availability rate offers unprecedented choice
• Sublease space comprising 10.3% of inventory provides additional options
• Market pricing 25% below Los Angeles metro average

Business Implications

This submarket offers the greatest cost-saving opportunities for Valley businesses. Companies prioritizing cost efficiency over prestige will find exceptional value. The high availability of sublease space, including over 500,000 SF at Farmers Plaza, provides unique short-term and flexible leasing opportunities.

Mazirow Success Story: Warner Center Right-Sizing

The market’s tenant-friendly conditions enabled our Mazirow Commercial team to help a Warner Center accounting firm achieve remarkable cost savings by “right-sizing” their space to 4,800 square feet, resulting in annual savings exceeding $350,000 from their previous lease costs. This reflects the new paradigm where businesses can optimize their real estate footprint while achieving substantial cost reductions through expert guidance.

Calabasas/Westlake Village: Premium Suburban Office Market with Exceptional Value

Market Overview

Calabasas/Westlake Village represents the San Fernando Valley’s most affluent office submarket, offering 7.6 million square feet of inventory with a current vacancy rate of 17.5%. This premium suburban location provides businesses with prestigious addresses at average rents of $35.00/SF—substantially below comparable markets throughout Greater Los Angeles.

The submarket demonstrates classic suburban office characteristics, with 75% of inventory rated 3 Star quality, predominantly featuring one- to two-story assets strategically positioned adjacent to the Ventura Freeway for optimal accessibility.

Key Market Metrics

• Vacancy Rate: 17.5% (near record highs)
• Average Asking Rent: $35.00/SF
• Net Absorption: -140,000 SF over past 12 months
• Availability Rate: 21.0%
• Sublease Space: 4.1% of inventory (significantly above metro average of 2.5%)

Business Implications

The Calabasas/Westlake Village market presents compelling opportunities for businesses across multiple scenarios. Companies seeking to establish or maintain a premium Valley presence will find exceptional value in current market conditions, with the ability to secure high-quality space at rates significantly below historical peaks.

Professional services firms particularly benefit from the submarket’s prestigious reputation and client accessibility, while the current tenant-favorable environment enables substantial cost optimization. Technology and media companies can leverage the area’s proximity to major entertainment industry hubs while achieving meaningful real estate savings compared to traditional Westside locations.

Corporate headquarters operations find value in the submarket’s combination of executive-level amenities, highway accessibility, and cost efficiency. The elevated availability across all property classes ensures businesses can right-size their operations while maintaining operational flexibility for future growth or contraction needs.

Market-Wide Trends Affecting All SFV Businesses

The New Space Paradigm

Across all three submarkets, businesses are embracing space optimization strategies:

• Right-sizing operations to match post-pandemic workforce patterns
• Hybrid work models reducing traditional space requirements
• Flexible lease terms becoming standard rather than exception

Construction and Supply Dynamics

• Minimal new construction across all submarkets maintains inventory stability
• No speculative development reduces future supply pressure
• Existing inventory renovation improving quality without adding quantity

Financial Market Factors

• Cap rates ranging from 7.4% to 7.8% across submarkets
• Limited investment sales activity creating pricing stability
• Estimated market pricing 20-25% below metro averages

Strategic Recommendations for SFV Businesses

For Businesses Seeking Immediate Cost Savings

Woodland Hills/Warner Center offers the greatest immediate cost reduction opportunities. With sublease space readily available and landlords highly motivated, businesses can achieve significant short-term savings.

For Businesses Prioritizing Location Prestige

Encino provides the optimal balance of prestigious address and competitive pricing. Strong absorption trends indicate continued business confidence while availability ensures competitive terms.

For Businesses Wanting Market Stability

Sherman Oaks offers the most balanced market conditions with moderate vacancy, stable rents, and consistent tenant demand patterns.

For All Valley Businesses

Current market conditions favor tenants across all submarkets. Key negotiation opportunities include:

• Extended lease terms with built-in cost escalation protection
• Tenant improvement allowances for space customization
• Flexible expansion/contraction rights to accommodate business changes
• Sublease rights for portfolio optimization

Looking Ahead: What to Expect in 2025

Rent Trends – Forecasts indicate modest rent growth across all submarkets, with increases remaining below inflation rates. This environment favors businesses planning lease renewals or relocations.

Vacancy Patterns – Elevated vacancy rates are expected to persist through 2025, maintaining tenant leverage in negotiations. Businesses should capitalize on these conditions for optimal lease terms.

Market Evolution – The Valley’s commercial real estate market is adapting to new business paradigms, with flexibility and cost efficiency becoming primary drivers rather than traditional space metrics.

Maximizing Opportunity in a Tenant Market

The San Fernando Valley’s commercial real estate market in 2025 presents exceptional opportunities for businesses willing to strategically evaluate their space needs. Whether seeking cost savings through right-sizing, location upgrades at competitive pricing, or simply better lease terms, current market conditions favor tenant objectives.

Successful lease negotiations require understanding each submarket’s unique characteristics and leveraging current market dynamics. Creative lease structuring that aligns with both current and anticipated business needs can deliver substantial cost savings while providing operational flexibility for an uncertain business environment.

For Valley businesses, 2025 represents an optimal time to reassess commercial real estate strategies and capture the significant opportunities available in today’s tenant-favorable market.

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Ready to Capitalize on These Market Opportunities?

Don’t navigate this tenant-favorable market alone. The expert team at Mazirow Commercial Inc. has the local market knowledge and negotiation expertise to help your business maximize these unprecedented opportunities.

How Mazirow Commercial Can Help:

Market Analysis & Strategy – We provide detailed market insights tailored to your specific business needs and growth plans.

Lease Negotiation – Our proven track record includes securing hundreds of thousands in annual savings for Valley businesses.

Space Optimization – We help you right-size your real estate footprint to match your current and future operational needs.

Portfolio Management – Whether you need expansion, downsizing, or relocation, we guide you through every step of the process.

Contact Mazirow Commercial Inc. Today

📞 (805) 449-1945

Schedule your complimentary market consultation today and discover how much your business could save in today’s tenant-favorable market. Our team is ready to put our proven expertise to work for your commercial real estate needs.

Don’t let these exceptional market conditions pass by—contact Mazirow Commercial Inc. and start maximizing your real estate investment today.

Market Data: Sherman Oaks, Encino, and Woodland Hills/Warner Center Office Submarket Reports – CoStar Group, Licensed to Mazirow Commercial, Inc., June 6, 2025.