The Los Angeles retail markethas a lot of strengths. Asking rents are up, overall, to $33.34 persquare foot, according to a new report from JLL.However, while rents continue to rise, a sign of demand, thevacancy rate has grown from 2018 to 46% and net absorption lastyear was negative 1.2 million square feet. The vacancy rate isclimbing even as new construction activity slows, downyear-over-year, according to the report.

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"America has too much retail square footage and not all of it isgood," Benjie Baker, VP at JLL, tells GlobeSt.com."That's a given. Furthermore, with the amount of data available,owners and retailers have a much more accurate read on the truevalue of a space. That is causing tremendous bifurcation in themarket between commodity retailers and experiential retailers,including entertainment concepts. This makes good real estate evenmore valuable and poor real estate less."

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The market seems to becoming more bifurcated. While obsoleteretail is left vacant, driving down occupancy rates, in-demandretail is seeing significant rent increases, enough to boostoverall rental rates. "To complicate things further, as rents forgood real estate escalate, tenants reduce their footprints in orderto minimize costs and streamline operations," says Baker. "Thewheat is rapidly getting separated from the chaff as the industryforcibly evolves."

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As retailers catch on and evolve to new trends—and find ways tocompete with online shopping—leasing activity is picking up. Infact, the year is already showing promise compared to 2019. "Itcertainly feels like activity has increased compared to 2019.Macrotrends continue to be relatively positive and that isreflected in retailer confidence," says Baker. "As mentionedpreviously, retailers are getting better and better atunderstanding their businesses. The more they identify what worksfor them, the more retailers can be confident and active."

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Still Baker warns not to get too excited about retail activitythis year, saying, "2020 still has a sense of cautious optimismbecause technology forces aggressive pivots with barely a moment'snotice."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.