LA County Retail Asking Rents Continue to Rise As Investors Remain Extremely Careful And Concerned About A Potential Downturn
Los Angeles, CA, Tuesday, August 01, 2017– According to research provided by NAI Capital, in the second quarter of 2017 the Los Angeles Retail market vacancy rate ticked up 10 basis points to 4.3% as 173,816 square feet of newly completed construction was delivered to the market. The delivery of completed new construction to the market has contributed to the rise in the vacancy rate - and this trend may continue. Los Angeles County has 1.4 million square feet of retail space under construction. Approximately 66% of the space under construction has been preleased.
In LA County there is a growing trend toward mixed-use, lifestyle and specialty center construction replacing malls and power centers as the primary centers of retail activity.
Average asking rents continue to rise. The average asking rent closed the quarter at $2.78/ SF, representing a 3.0% increase over the prior quarter and a 6.5% increase from last year.
In the second quarter, the Los Angeles retail market saw an increase total sales volume of 10.5% over the prior quarter as investors continue to look for reasonably priced low risk investments. Leasing activity totaled just under 1.9 million square feet, representing a decline of 5% over the first quarter.
According to Fariba Kavian, Executive Vice President with NAI Capital’s West Los Angeles office, “There is a disconnect that is happening between buyers and sellers right now. Buyers are not on a feeding frenzy any longer but many sellers refuse to acknowledge that the market is changing. Unless it is a premium property, most buyers are extremely careful and concerned about a potential downturn and therefore not motivated to purchase, unless they build in the risk. This translates into a slow-down in transaction volume and properties remaining on the market for a longer period. Eventually, it will lead to lower cap rates.”
According to a survey released in June from Chapman University’s Anderson Center for Economic Research showed the California Composite Index of Consumer Sentiment declined 10 points from the first quarter to 98.7. This is significant, because according to the survey a reading below 100 indicates pessimism. While consumers may be concerned about their economic future throughout California, the economic outlook for Los Angeles County remains solid. From June 2016 to June 2017, Los Angeles County gained 83,600 nonfarm jobs dropping the unemployment rate to 4.5% - the lowest since 2007.
To access the full Los Angeles Retail Market Outlook report, visit:
About NAI Capital
NAI Capital is the largest independently owned full service commercial real estate firm headquartered in Southern California. As one of the largest members of NAI Global, the premier managed commercial real estate service network with 400 offices and 7,000 market leaders spanning the globe, NAI Capital provides a complete range of tr-ansaction, valuation, investment, property management and consulting services. By leveraging our local expertise with our global reach, NAI Capital offers innovative, customized solutions and seamless service to owners, tenants, investors and developers throughout Southern California. NAI Capital clients have built their businesses on the power of our expanding network. We are a dynamic growing commercial real estate company. At NAI Capital we work together putting our clients first.
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To learn more, visit www.naicapital.com
About NAI Global
NAI Global is a leading global commercial real estate brokerage firm. NAI Global offices are leaders in their local markets and work in unison to provide clients with exceptional solutions to their commercial real estate needs. NAI Global has more than 400 offices strategically located throughout North America, Latin America, Europe, Africa and Asia Pacific, with over 7,000 local market professionals, managing in excess of 425 million square feet of property. Annually, NAI Global completes in excess of $20 billion in commercial real estate transactions throughout the world.
NAI Global provides a complete range of corporate and institutional real estate services, including brokerage and leasing, property and facilities management, real estate investment and capital market services, due diligence, global supply chain and logistics consulting and related advisory services.
To learn more, visit www.naiglobal.com.
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