Retail Leasing Is Outpacing 2018 Activity

Retail owners have finally cracked the new consumer code, and retail leasing is up as a result. According to a new report from CBRE, retail leasing in Los Angeles is on track to surpass last year’s activity. This year, there have been 3.3 million square feet in retail leasing activity, compared to 5.7 millions square feet all of last year.

“A strong economy, job growth, low unemployment and consumer confidence have been driving spending, which in turn has buoyed retail leasing,” Jeff Moore of CBRE tells GlobeSt.com. “The best-located and amenitized shopping centers continue to experience strong demand for limited availabilities. Restaurants have been a very active category as have the fitness sector, furniture, entertainment uses and the discount fashion sector.”

These categories, known as the Five F’s, are the new handbook of retail leasing, and they are driving the majority of activity. The have accounted for more than 23% of retail leasing in 2019 compared to only 7% in 2009. “Consumers want an experience when they go out whether that is the buying experience within the retail store or restaurant space or when walking through a shopping center,” says Moore. “Retailers and landlords need to provide the environment that motivates consumers to shop, eat and hang out, otherwise many consumers will choose convenience and buy online.  Excellent service , a fun environment, a unique product offering and/or value pricing can all be successful initiatives which in turn draw consumers into stores.”

Food and fashion been the most popular. This year, food chains have accounted for 10 million square feet in leasing activity, while fashion has accounted for 15 million square feet of activity.

This segment of retailers is a significant shift from years prior when big box and department store retailers fueled leasing activity. “Department stores, big box retailers, traditional grocery stores, chain sit-down restaurants and independent retail shop space defined the retail mix of the past,” says Moore. “Today the trend is toward convenience, unique experiences, service, fun and value propositions.”

Through the end of the year, Moore expects retail leasing activity to maintain momentum, particularly in the Five F categories. “Activity will remain strong in the Five -F’s categories and with it competition to get into the best shopping center locations,” he says. “E-commerce will continue to grow but will never replace consumers’ need to get out, have an experience and personal interaction.”