Retail Asking Rates Continue to Increase
In the first quarter of 2017, the Los Angeles retail market vacancy rate ticked up 30 basis points to 4.1% as 532,000 sq.ft. were delivered to the market, according to the latest research from NAI Capital. This new space includes the largest IKEA in the United States, at 470,000 sq.ft. in the city of Burbank. Los Angeles County has 1.1M sq.ft. of retail space under construction. Approximately 61% of the space under construction has been taken.
The average asking rent continues to increase, up 6.3% over last year. At $2.69 per sq.ft. per month, rates are the highest seen in Los Angeles County since the peak in 2008. Lifestyle centers saw a significant increase in asking rents this quarter, jumping 38% from the prior quarter to $3.64 per sq.ft. per month. This significant rental increase is the result of lifestyle center landlords, such as Rodeo Collection and Promenade on the Peninsula, increasing their asking rates for new tenants. In contrast, some traditional malls and power centers have been forced to lower average asking rents in light of rising vacancies.