Los Angeles’ retail real estate sector continued to face challenges in early 2025, with supply beginning to stabilize but little improvement expected for the rest of the year. In the first quarter, net absorption was negative 625,237 square feet, marking the fifth consecutive quarter of declines, according to JLL. JLL attributes the ongoing weak demand to persistent market headwinds, suggesting that a significant rebound is unlikely in the near term.
Retail rents were down by 0.4 percent on average to $36.59 per square foot.
Also, vacancy trended the wrong way. The rate of 5.8 percent represents a 10 basis point increase from the previous three months and a 50 basis point spike year-over-year.
Recommended For You
"Malls are experiencing the highest vacancy rates, registering at 11.5% in Q1 2025, an increase of 10 basis points from Q4 2024 and 60 basis
points from Q1 2024," JLL explained.
However, JLL noted that the vacancy rate was saved from further increases thanks to the demolition of 4.5 million square feet of retail space from 2021 to 2024. That has outpaced deliveries, which totaled 3.6 million square feet over the same period. Also, deliveries were 305,271 square feet less year-over-year in the first quarter. Currently, just 825,000 square feet is under development, accounting for 0.2 percent of the retail inventory. Plus, that number is down 58.3 percent from the average recorded between 2015 and 2019.
But still, even with supply trending the right way, it might not be able to lift up the fundamentals in Los Angeles' retail sector in the short term.
"Despite these mitigating factors, rent growth is expected to lag the national average throughout 2025. Investors are likely to maintain a cautious approach, a reflection of ongoing challenges," JLL wrote.
El Super secured the top lease of the first quarter with its new 50,000 square foot space in Long Beach. JH Real Estate Ptnrs struck the biggest acquisition, with its $37.5 million purchase of Village Walk (129,640 square feet) from UBS Realty.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
