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The Real Deal Los Angeles

Is DTLA’s retail market becoming a bit too hot?

High rents, empty storefronts and a full pipeline point to overheating in retail sector
French retailer A.P.C.'s DTLA storefront at 125 West 9th Street (Credit: Taiyo Watanabe, c/o Warren Office for Research and Design)

French retailer A.P.C.’s DTLA storefront at 125 West 9th Street (Credit: Taiyo Watanabe, c/o Warren Office for Research and Design)

Speculation is mounting about a bubble in Downtown L.A.’s retail market.

The combination of empty storefronts and enduringly high rents point to the possibility that the retail market has become overheated, Los Angeles Downtown News reported. That could be further exacerbated by a pipeline full of projects such as Row DTLA, Atlas Capital’s mega-project that will house about 100 shops and 15 restaurants, and Ratkovich’s the Bloc.

“The inflation of rent has been so radical that whoever entered in the last two years is probably the most vulnerable,” Yuval Bar-Zemer, principal of Linear City, told L.A. Downtown News. “Within the next year, we’re gonna see casualties.”

Since 2013, asking retail rents in Downtown have increased from an average of $2.16 per square foot to $2.85 in the first quarter of this year. But some landlords are demanding up to $10 per square foot for the most prime spaces, according to Avison Young principal Derrick Moore.

“I think pricing is higher than the market can afford. It’s a formula for disaster,” he told LADTN.

Hal Bastian, the former head of the Downtown Center BID’s economic development, agreed: “If you build it expecting them to come, you are mistaken,” he said. [LADTN] — Cathaleen Chen