Market Activity Slows at Year End
The Los Angeles Basin retail market closed the fourth quarter with negative absorption as market fundamentals showed signs of slowing market activity as big box tenants continue to exit the Los Angeles Basin region. Tenant demand recorded negative at 542,200 square feet. There was an additional 410,400 square feet of new construction added to the inventory base. Los Angeles County had the highest amount of new construction deliveries, recording 350,600 square feet, with the Inland Empire market following recording 59,800 square feet, while Orange County had no new construction deliveries.
All three counties recorded negative tenant movement with Inland Empire recording the most move-out’s at -326,800 square feet of net absorption with Orange County following at -202,600 square feet and Los Angeles County recording slight negative movement of -12,800 square feet.
The vacancy rate for the Greater Los Angeles region increased 30 basis points to 5.6%. Vacancy changes have been minimal on a year-to-year basis (20 to 30 basis points). Orange County (4.2%) and Los Angeles County (4.7%) recorded the lowest vacancy rates, while Inland Empire recorded the highest vacancy rate at 8.1%.
Despite a slowdown in tenant movement, the weighted average asking rental rate continued to increase, climbing $0.043 from the previous quarter to $2.21 per square foot (PSF) triple net (NNN), per month. Asking rents were highest in Los Angeles County at $2.57 PSF NNN and lowest in the Inland Empire at $1.80 PSF NNN. Super regional malls in Los Angeles County remains the most expensive space at $3.96 PSF NNN.