Greater Los Angeles Retail Continues to Witness Declining Vacancy
The Los Angeles Basin retail market remained on a positive note as third quarter overall net absorption recorded at 1.7 million square feet (SF). Similar to the previous two quarters, all three counties within the Los Angeles Basin recorded positive tenant movement. The Los Angeles County vacancy rate decreased 20 basis points to 4.3%, recording 534,100 SF of net absorption. The Orange County market saw a decrease in vacancy by 40 basis points to 4.3%. Inland Empire vacancy also fell by 40 basis points to 9.1% as we move into the 4th quarter.
The vacancy rate for the Greater Los Angeles region decreased to 5.7%, down 60 basis points from last quarter. A longer historical perspective shows that the vacancy rate a year ago stood at 6.2%. The weighted average asking rental rate slightly increased to $1.97 per square foot (PSF) per month, triple net (NNN) from the previous quarter’s rate of $1.95 PSF NNN. Orange County continues to dominate the average asking rental rate in the region, recording at $2.29 PSF NNN as the Inland Empire market remains the lowest at an average asking rental rate of $1.39 PSF NNN.
According to the Chapman University Economic Research press release, California consumer sentiment increased in the third quarter to 108.1 compared to 94.3 last quarter. This is the first substantial increase since third quarter 2014. This optimistic growth is believed to stem from stock market record highs and overall employment growth.
It is expected that consumer spending over the next six months will remain healthy, which puts retailers on solid footing moving into the end of 2016 and first half of 2017. National retail and food services sales have increased by 1.9% from one year ago as of August 2016.