Los Angeles Retail Sector Shows Resilience Despite Q4 Sales Dip

Despite a dip in sales volume during the fourth quarter, Los Angeles' retail sector is demonstrating resilience in terms of consumer demand. The market's stability suggests a nuanced picture of the city's shopping landscape, where consumer interest remains robust even as transaction numbers fluctuate.

A report from CBRE found that net absorption hit 184,000 square feet in the last three months of the year. That marked the only quarter of 2024 that the market saw positive absorption. That's quite the turnaround from the third quarter, as the category then hit nearly -841,000 square feet. The performance in the fourth quarter was fueled by lifestyle, malls, neighborhood, as well as neighborhood community and strip retail. They all combined for nearly 300,000 square feet in positive absorption.

That came as retail sales plunged to $527.6 million, from $345.3 million in the third quarter. Paragon Commercial Group made the top purchase in the last three months of the year with its 251,541 square-foot purchase of Huntington Oaks Shopping Center in Monrovia for $79.4 million. The developer was followed by Merlone Geier Partners and CIM Group, which made $57.8 million and $31.5 million in acquisitions, respectively.

The rest of the core retail fundamentals in LA saw small or no changes. Rents dropped by six cents from the third quarter to $3.03 NNN per square foot. The San Fernando Valley averages the lowest rents at around $3 per square foot, with Westside at the highest with nearly $5 per square foot.

Deliveries in the fourth quarter ticked up to 39,000 square feet compared with 28,000 square feet.

The availability rate averaged 5.9 percent, with vacancies seeing no change from the third quarter. Availability was the highest in Westside (nine percent), and the lowest in Tri-Cities (four percent).

CBRE did not provide an outlook but overall noted that fundamentals have "strengthened" in LA's retail sector following the fourth quarter.