E-commerce has decimated traditional brick-and-mortar retail stores but in Greater Los Angeles, 2017 was not nearly as grim. Asking retail rents climbed nearly 10 percent from the year before, with West L.A. and Mid-Wilshire posting particularly strong numbers, according to the latest quarterly report from CBRE.
Vacancy rates remained flat at 5.2 percent, while lease rates rose and construction fell. While the vacancy rate Downtown was still relatively high, there are signs of improvement there.
Beverly Hills, Venice and Santa Monica all commanded the largest rents for signed leases, the report showed.
In the Greater L.A. market, the average asking rate increased to $2.71 per square foot, equivalent to a 9 percent rise from 2016 to 2017.
Notable recent deals in the Westside included Equinox’s 32,000-square-foot lease at One Culver, as well as the Crack Shack restaurant and Warby Parker outpost in the redeveloped Westfield Century City. The retail submarket had an overall vacancy of 6.7 percent, and a 374,950 square feet under construction.
Overall, the retail market remained tight in the quarter, with about 231,100 square feet of positive absorption. The vacancy rate stayed the same at 5.2 percent. Boutique fitness clubs, grocery and discount tenants were the most active, according to CBRE’s research.
But not unlike many other economists, CBRE experts are expecting momentum to slow down in the coming years and vacancy levels to rise slowly, as shopping continues to online.
Downtown Los Angeles had the highest vacancy ranking with 11.1 percent empty space. But the neighborhood has been welcoming a flurry of new tenants recently, as evidenced by Adidas’ deal for 31,000 square feet at the Row DTLA, and fashion startup CoBird’s 56,000-square-foot Million Dollar Theatre snag. Still, new deliveries in the area, such as the 130,000-square-foot At Mateo project in the Arts District and the 160,570-square-foot Collection at Oceanwide Plaza in the South Park helped drive up the vacancy.