DTLA Retail at a ‘Tipping Point’

Downtown Los Angeles is rapidly becoming a retail epicenter, attracting major retail brands and the home of several retail hubs. According to the DCBID, Apple, Nike, Uniqlo, Nordstrom, West Elm, Vans, Blue Bottle, Shake Shack, GAP, Warby Parker have all arrived in the market, showing an evolution of the submarket’s retail cache beyond the earlier adopters, restaurants and daily-needs resources. The massive population growth—now at 70,000 residents and a 500,000 day-population—has been a major driver of this retail growth, but the DCBID says that there is still more to come.

“This is essentially the tipping point moment of all of the things that we have been attracting over the last several years,” Nick Griffin, executive director of the DCBID, tells GlobeSt.com. “The base residential population is getting to the critical mass that it has at over 70,000 is an underlying driver, because that is what gives retailers the sense that Downtown Los Angeles is a standalone market and a market that can support itself. There was already a certain amount of strength with the size of the working population downtown, but I think that the residential population was the missing ingredient there in terms of making it a really viable market.”

While the growing population has been essential to attracting retailers, Downtown Los Angeles has also gained global cache has a destination location. This has also helped to attract well-known chains, which are looking to be part of the downtown experience. “The extent of Downtown Los Angeles’ profile nationally and internationally is equally as important,” adds Griffin. “The profile has reached a peak, and it is very much on the map. That is critical for brands in general, and that is an important driver.” The retail activity is showing up in more than new leases. Retail sales have grown 30% since 2014 and the retail market has grown to nearly 25 million square feet of space. DTLA also has a low 4.1% vacancy rate with average asking rents at $2.64.

The activity in the submarket also serves to highlight the types places where retail has shown resilience, despite ecommerce. “Downtown Los Angeles from a retail perspective hits a lot of the key success factors for retail today,” says Griffin. “There is a lot of talk about the death of retail, and it is greatly exaggerated. Retail is actually doing very well. There are certainly retail that isn’t doing well, but I would argue that retail is something that we don’t need or that we don’t need in person.”

Downtown Los Angeles offers the unique experiential can’t-get-online environment that both retailers and consumers want, and it is all translating into retail leasing activity. ‘Retail that mixes bricks-and-clicks and incorporates experience and engagement is thriving,” says Griffin. “That really plays to downtown’s strengths. This is a market that is interesting and compelling, and that is really an experience.”