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Big-box store closures in Q1 clear out retail space in LA: report
The Greater LA retail market also reported its 5th straight quarter with lower lease rates
The big boxes of Los Angeles are emptying out.
The city has an increasing amount of vacant retail space, in large part because of some major big-box store closures, according to a new report from CBRE. Those stores were the latest victims of the ever-expanding e-commerce industry.
Overall, the Greater L.A. retail market area saw vacancy rise 5.4 percent in the first quarter, according to CBRE.
That led to 323,000 square feet of more vacant retail space in Greater L.A. compared to the same period last year. Lease rates dropped 5.5 percent, to $2.40 per square foot. That marked the fifth straight quarter of falling lease rates.
Over the first three months of the year, no new retail development was completed, but there was 493,300 square feet of new retail space scheduled to be completed before the end of this year, CBRE said. In all, Greater L.A. had 133.2 million square feet of occupied retail space in the first quarter, with about 1.7 million square feet under construction.
While big-box stores are struggling, there is strong demand from fitness, furniture and entertainment businesses, which are likely to fill the vacant spaces, CBRE said.
Greater Downtown vacancy was the highest of the 12 submarkets at 8.8 percent. And while the Burbank, Glendale, Pasadena submarket was the tightest at 2.6 percent — retaining its position — that was up from 2.1 percent in the fourth quarter of 2018.
One potential bright spot is the long-planned Target store in East Hollywood off of Sunset Boulevard. It received construction permits after years of legal delays, and work has resumed on the two-story, 194,000-square-foot location. It is expected to be completed this year. In Santa Monica, the redevelopment effort to transform the former Sears into a mixed-use property also continued. Located across the street from the Staples Center, the new development known as “The Collection” is on track to complete construction by the end of the year, and Pier 44, an 80,000-square-foot neighborhood center development in Marina Del Ray is expected to open by the third quarter.