Market Report: Los Angeles

The Downtown Los Angeles retail submarket is navigating through a dynamic leasing landscape, influenced by shifting consumer behaviors and evolving urban dynamics. Despite the ongoing remote work trend impacting office utilization, there’s a notable resurgence in foot traffic as patrons return to theaters and sporting events, sparking renewed interest in vacant restaurant spaces. However, the vacancy rate remains slightly elevated compared to the metro average, primarily due to the presence of aging properties. While some areas like the Financial District, Arts District, and South Park have witnessed successful leasing endeavors, particularly in the restaurant sector, closures still outpace openings. Nevertheless, the influx of multifamily housing developments and key projects like Related California’s The Grand have positioned the area as an attractive destination for both restaurateurs and retailers alike, with renowned brands like Apple strategically establishing a presence along the bustling Broadway corridor.

Amidst this leasing landscape, capital markets within the submarket have experienced a slowdown in transaction activity since 22Q3, with institutional capital exhibiting caution in significant acquisitions. This cautious approach is further compounded by the implementation of the ULA transfer tax in the previous year, contributing to a decline in investor appetite. Despite these challenges, the adaptive reuse of retail spaces, exemplified by Apple’s store on Broadway, underscores the potential for creative solutions to revitalize the retail sector. As the market continues to adapt to changing consumer preferences and economic conditions, stakeholders are increasingly focusing on innovative strategies to capitalize on emerging opportunities while addressing the evolving needs of the Downtown Los Angeles retail submarket.