Fourth Quarter 2025
Los Angeles County Retail Market Shows Gradual Stabilization as Pricing Resets Drive Investment
Lower pricing and rent adjustments boost sales volume while landlords work to backfill space from recent store closures.
Retail space availability remains elevated, but competition for prime locations is expected to stay steady as the market rebalances.
MARKET OVERVIEW
Los Angeles County’s retail market closed 2025 with mixed yet generally stabilizing conditions. Steady consumer activity supported demand for space, but elevated operating costs and retailer bankruptcies continued to challenge landlords. Even so, excess inventory is gradually being absorbed and occupancy posted modest quarterly gains.
Retail bankruptcies increased nationally in 2025, affecting several well-known chains including Joann, Forever 21, Rite Aid, and others. Store closures created pockets of vacancy, but also opened opportunities for expanding retailers to backfill well-located space. As a result, occupied retail space in Los Angeles County increased by roughly 425,000 square feet quarter-over-quarter, though still remained about 1.1 million square feet below year-ago levels. Total vacant space declined from its recent peak to approximately 19.4 million square feet, signaling incremental progress toward balance.
Landlords continued adjusting to softer leasing conditions by offering concessions and modest rent reductions. The average asking rent for direct space slipped slightly to $2.87 per square foot triple net, down one cent from the prior quarter and $0.28 year-over-year. Leasing activity also slowed, with 2025 totals finishing 17.1% below 2024.
Investment activity strengthened as pricing reset. The average retail sale price reached $482 per square foot, with the median at $524 per square foot, reflecting stronger trades among higher-quality assets. Lower pricing encouraged deal flow, pushing fourth-quarter sales volume above 3.8 million square feet, a 34.4% increase quarter-over-quarter and slightly above the five-year fourth-quarter average. Total 2025 sales volume rose 17.8% year-over-year to more than $2.6 billion.
TRENDS TO WATCH
Landlords continue to adjust asking rents to improve cash flow and fill vacancies across Los Angeles County, particularly in LA West, the region’s most prestigious retail market. LA West currently holds approximately 5.2 million square feet of available retail space—the highest in the region—following a 7.8% year-over-year increase. While asking rents for direct space dropped 5.1% to $4.46 per square foot triple net, this pricing correction has spurred significant market activity. Although leasing is up a modest 2.8% from 2024, sales volume surged by 65.3% in 2025, with roughly 1.3 million square feet changing ownership. This spike in investment was driven by a 13.1% plummet in the average sale price per square foot. Despite these transactions, the vacancy rate rose to 8.5%, the highest in the county, while the total availability rate hit an all-time high of 10% for two consecutive quarters.
A similar trend is unfolding in the North LA County market, the region’s largest by inventory, which holds 4.3 million square feet of available space. Availability in this market is up 7.9% year-over-year, while direct asking rents have decreased 3.4% to $2.55 per square foot triple net. Market activity here remains mixed; while leasing saw a 22.8% decline from 2024, sales outpaced previous years with a 48.3% increase, representing 2.6 million square feet in ownership changes. The vacancy rate in the North market currently sits at 5.5%, a 20-basis-point increase year-over-year, while the total availability rate of 5.8% has officially returned to pre-pandemic levels last seen in Q1 2020.
Despite these headwinds, expanding retailers are aggressively pursuing well-located spaces, particularly those vacated during the “retail apocalypse” or offered for sublease. Brands like Dollar General, Aldi, and Tractor Supply lead the market in planned store openings for 2026. Conversely, the casual dining sector is seeing a strategic contraction, exemplified by Yum! Brands’ decision to close 250 underperforming Pizza Hut locations across the United States in the first half of 2026. This follows a 2025 global performance where closures outpaced new store openings. Within California, Pizza Hut currently maintains approximately 500 locations, 149 of which are located within Los Angeles County.
Looking ahead through 2026, competition for prime retail real estate is expected to remain strong, supporting continued market activity. Investors are capitalizing on repriced opportunities, reflected in a 25.4% year-to-date increase in retail building sales volume, which reached 12.5 million square feet in 2025. As the sector continues to stabilize and reposition, retailers, landlords, and investors are likely to remain active in pursuing well-located assets and strategic sites across Los Angeles County.
