Greater Los Angeles Retail Starts 2017 At A Slow Pace
The Los Angeles Basin retail market started 2017 off slow by recording negative absorption recording at -439,800 square feet (SF) for the quarter. This is the first time the Los Angeles Basin has witnessed negative absorption since year end of 2015. Both Los Angeles County (-307,900 SF) and the Inland Empire recorded negative absorption (-133,900 SF) with Orange County recording flat absorption (2,000 SF) movement.
The vacancy rate for the Greater Los Angeles region to 5.7%, up 30 basis points from last quarter. Although the vacancy rate increased, it is still lower then where it stood one year ago at 6.2%. Orange County recorded the lowest vacancy rate at 4.5%, an increase of 40 basis points. Los Angeles County followed, recording a vacancy of 4.7%, an increase of 20 basis points and Inland Empire recorded the highest vacancy rate at 8.6%, an increase of 10 basis points.
The weighted average asking rental rate increased for the quarter to $1.98 per square foot (PSF) per month, triple net (NNN) from the previous quarter. Asking rents were lowest in the Inland Empire at $1.42 PSF NNN and highest in Los Angeles County at $2.44 PSF NNN. Super Regional Malls in Los Angeles County remain the most expensive space at $5.22 PSF NNN.
- The Los Angeles County retail market recorded negative -307,900 SF of absorption, making it the lowest amount of absorption in the Los Angeles Basin.
- Orange County absorption recorded flat at positive 2,000 SF. Total vacancy increased to 4.5% from last quarter’s 4.1%.
- The increase in vacancy mainly stems from The Source at Beach in Buena Park delivering and adding 170,000 SF of vacant space onto the market.
- Inland Empire retail market activity witnessed an increase in vacancy by 10 basis points to 8.6% during the first quarter.
According to the Chapman University Economic Research press release, California consumer sentiment increase in the first quarter, up nearly 6 points to 111.4. With the stock market continuing to post record breaking levels, it appears consumers are maintaining their optimism in their current settings. Consumers confidence for the future remains questionable. There is currently 1,054,100 SF of new retail inventory under construction in the Inland Empire market. The largest project currently under construction is the Renaissance Marketplace located in Rialto at 260,765 SF. The regional mall is expected to be completed by mid-2018. Recent leases signed at the Renaissance Marketplace include: Burlington, 24 Hour Fitness, Ross, Party City and Ulta.