Q4 2022 Retail Market Outlook – Los Angeles
LA County’s retail market post-pandemic recovery moved slowly in Q4 2022. Vacancy, sublease space, and slack demand for retail space confronted landlords contending with a changing economy. While vacated space that was hastily put on the market during the pandemic shutdown is getting occupied as retailers pivot back to brick and mortar, it’s been gradual. Vacant retail space on the market decreased by a mere 11,162 square feet from last year at this time, keeping the total amount of vacant space on the market to 16.8M square feet at yearend.
TRENDS TO WATCH
Landlords to improve occupancy will continue to adjust rent. The LA West submarket, which holds approximately 3.9M square feet of available retail space, witnessed a 22-cent quarter over quarter increase in rent for direct space at $4.76/SF triple net. With the highest average rent and vacancy, LA West netted the most negative net absorption of 2022. Moreover, sublease space increased 83.6 percent in LA West year over year as the average rent for sublease space declined 3.5 percent.