For the Los Angeles retail market, the first quarter was a nightmare. Big box store closures accounted for an overall drop in rented space, which amounted to 323,000 square feet.
But the second quarter saw a recovery, according to a new CBRE’s Greater L.A. retail report. The report showed that the local retail market would end 2019 with overall lease gains if the pace of the second quarter kept up. Leading the way were fitness centers and food stores, which took new leases.
From April through June, a little over 206,000 square feet of new space was added. The opening of Shappell Liberty Investment Properties’ $150 million mixed-use project Vineyards in Porter Ranch accounted for much of that newly completed space.
Around 1.5 million square feet of retail space is now under construction in the city, and half is expected to be delivered by the end of the year. A third of that is being built in Downtown L.A., where developers are building mixed-use properties as well as renovating older spaces.
In addition to fitness centers and food stores, other big leases for the second quarter included furniture, fashion, and entertainment, according to the report. Regal Cinemas, Whole Foods, and fitness chain Equinox signed some of those larger leases.
Overall average asking lease rates in L.A. were up 16.1 percent quarter-over-quarter to $2.89 per square foot, thanks in part to new vacancies on the pricey Westside. That’s where retail space is more expensive to lease than anywhere else in the region. Those vacancies mean average asking rates jumped from $4.91 per square foot in the first quarter to $7.53 per square foot.
But much of the retail industry is still in a tailspin. In February, Payless ShoeSource was one of the largest retailers to enter bankruptcy and shutter its stores. But a host of other retailers continue to feel the heat, most recently Barney’s New York, which filed for bankruptcy this week. The famous retailer has a store in Beverly Hills.