Positive Momentum Continues for Greater Los Angeles Retail
The Los Angeles Basin retail market closed the third quarter on a positive note as net absorption recorded 1.2 million square feet (SF). A total of 499,000 SF was delivered to the base with new construction completions. The Los Angeles County market had the highest number of new construction deliveries recording 248,700 SF, with the Inland Empire following at 135,200 SF and Orange County recording last at 115,100 SF. All counties recorded positive absorption: Los Angeles County (934,800SF), Inland Empire (228,800 SF) and Orange County (52,200 SF).
The vacancy rate for the Greater Los Angeles region decreased to 5.4%, down 20 basis points from last quarter. The vacancy rate a year ago stood at 5.7%. Los Angeles County recorded the lowest vacancy rate at 4.2%, a decrease of 60 basis points. Orange County followed, recording a vacancy of 4.3%, a decrease of 10 basis points, and the Inland Empire recorded the highest vacancy rate at 8.4%, a decrease of 10 basis points.
The weighted average asking rental rate increased up $0.01 to $2.00 per square foot (PSF), triple net (NNN), per month from the previous quarter. Asking rents were highest in Los Angeles county at $2.54 PSF NNN and lowest in the Inland Empire at $1.46 PSF NNN. Super regional malls in Los Angeles County remain the most expensive space at $6.20 PSF NNN.
Annual national retail and food services sales for August 2017 increased by 3.2%. According to the Conference Board Consumer Confidence Index, consumer confidence decreased slightly in September due to the impact of recent weather events. Despite the slight downtick in confidence, consumer assessment of current economic conditions remains favorable as the economy is expected to expand at its current pace.
The Los Angeles County retail market recorded positive movement, recording 934,800 SF of absorption and resulting in the highest amount of absorption in the Los Angeles Basin. Currently, a total of 1,180,800 SF of retail space is under construction in Los Angeles County.
Orange County absorption recorded positive movement at 52,200 SF. Approximately 555,000 SF of retail space is under construction
in Orange County.
Inland Empire retail market activity witnessed a decrease in vacancy by 10 basis points to 8.4% during the third quarter. Currently 1.2 million SF of new retail inventory is under construction in the Inland Empire market.
The Los Angeles County market had the highest number of new construction deliveries recording 248,700 SF, with the Inland Empire following at 135,200 SF and Orange County recording last at 115,100 SF. The largest Greater Los Angeles retail project currently under construction is the 260,765 SF Renaissance Marketplace located in Rialto. The regional mall is expected to be completed by mid-2018. Demand for retail space in Orange County is expected to remain positive as new multifamily product continues to deliver within the market.