LA County Retail Vacancy Rate Rises to 6 Percent

A growing number of storekeepers are walking away from shops across Los Angeles County as the nation’s trade war with China deepens.

The retail vacancy rose more than 2 percent last quarter to 6.1 percent from the prior period, and 10 percent from a year earlier, L.A. Business First reported, citing figures from NAI Capital Commercial.

The empty storefronts totaled 19.5 million square feet, up 1.8 million square feet from a year ago.

The highest vacancy was in the central submarket around Downtown Los Angeles, at 8.3 percent, followed by West Los Angeles at 8.1 percent.

Jesse Paster, a retail broker and vice president with NAI Capital, said retail is still recovering from the pandemic, with many retail brokers looking to move into other types of real estate.

“People discuss how retail is not doing well, but it’s evolving and it’s changing,” Paster told L.A. Business First. “Consumer habits change, but retail will always have a place for that.

“The industry itself is taking the necessary steps to right-size itself.”

At the same time, retail sales volume totaled $392 million in the first three months of the year, up 20 percent from a year ago, according to NAI, with price adjustments in the market driving a 103 percent jump in square footage sold.

Sales volume fell 32.6 percent quarter over quarter, totaling 2.9 million square feet, down from the strongest fourth-quarter performance since 2021.

The median sale price for retail space in L.A. County fell to $469 per square foot last quarter, down almost 2 percent from late last year, and down 9.2 percent from a year earlier.

Landlords have dropped asking rents in response to low occupancy, while others have listed their properties for sale rather than for lease. Paster said tenants are looking for favorable landlord contributions and tenant improvement packages on top of fair rent.

Some 1.5 million square feet of retail space was leased in L.A. County last quarter, down 23 percent from the prior period and down 18 percent year over year.

“Tenants want visibility and they want convenience,” Paster told L.A. Business First. “There’s a lot of old real estate that has fallen on hard times, and to bring it up to current standards is something that either the tenants are going to do or the landlord is going to have to do.”

Landlords could be looking at rougher months ahead. While tariff threats have cooled slightly, the Trump administration has continued to press 145 percent tariffs on goods from China, putting the kibosh on many goods to shops.

The cost of retail goods may drive down demand for storefronts, curbing leasing activity in L.A. County’s retail market, NAI’s report said. Prime retail space is expected to stay in demand, while pricing trends reflect both investor confidence and “landlord survival strategies.”

— Dana Bartholomew