L.A. Residential Increases Changing Retail Landscape

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LOS ANGELES-GlobeSt.com caught up with Tracy Taft, Director with Charles Dunn Co.'s Downtown Los Angeles office, to talk about the retail leasing environment in Downtown. Taft, along with marketing team Chris Runyen and Mark Takeichi have recently been tapped to market 95,300 square feet of retail space on the ground floor of six luxury apartment properties in Downtown Los Angeles for owner/developer, G.H. Palmer Assoc.

GlobeSt.com: Can you give me some of your insight on the Downtown Los Angeles retail market?

Tracy Taft: We're seeing major investment being made in retail as Downtown enjoys an explosive revitalization. Figat7th and LA Live have been incredibly successful, attracting a strong consumer base of an estimated 10 million visitors a year. There are also about 500,000 daily employees, and growing numbers of residents. With this rapidly expanding consumer base, there is strong demand for goods and services which satisfy daily tasks as well as luxury goods and entertainment. We are expecting the 5.9% retail vacancy to tighten as demand increases. At the same time, additional retail inventory is being added as developers create new opportunities with each new project that is built. 

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GlobeSt.com: Please expand on residential market growth in Downtown and how it relates to retail.

Taft: Downtown residents have increased by 6% since 2011. A 2013 demographic study conducted by the Downtown Center Business Improvement District reported approximately 52,400 residents in Downtown, with 30,600 residential units—up 15% from 2011. Developers, of course, are forecasting further increases, as they aggressively develop more residential units.

With the residential population growing as fast as it is, a different type of retail is now in demand. Downtown's spread-out population, limited parking, and few spaces for large retail hubs are creating a niche for retail which provides goods and services to its local community. The incredible success of the recently opened Neighborhood Wal-Mart in Chinatown and the South Park Ralphs speaks to the in-pocket demand for convenience and easy-access retail amenities.

Downtown has several growing neighborhoods that are largely retail deficient. Our leasing assignment with G.H. Palmer's Downtown portfolio is a prime example of large, residential populations with little to no local retail amenities. Each of the portfolio properties has access to waiting populations of consumers with fewer cars and a greater desire for local retail within walking distance from home and the office. We are strategically targeting retailers who meet the needs of these residents, their neighbors, and nearby businesses.

GlobeSt.com: What types of retailers will fill the space at G.H. Palmer's various properties?

Taft: Each of the six properties have ample ground floor retail space below luxury apartment projects situated across greater Downtown, running adjacent to the 110 Harbor Freeway. We are seeking a diverse tenant mix of local, regional and national retailers to meet the unique needs of the immediate areas in which these properties are located.

For example, the Orsini, on the corner of Figueroa Street and Sunset Boulevard, has significant foot and vehicle traffic, which will accommodate traditional retail tenants. The Piero, on the other hand, is adjacent to Good Samaritan Hospital and may attract tenants to provide goods and services to the doctors, staff, and patients of the hospital. These consumers want to be within walking distance of retail amenities and prefer the convenience and accessibility of ground floor retail frontage.

All six properties will benefit from the presence of neighborhood retailers as well, such as convenience stores, drugstores, dry cleaners, coffee shops, dining, and other needed services. Our goal is to create an ideal tenant mix for the properties' communities, our client, and targeted retailers.

GlobeSt.com: Why did G.H. Palmer decide now was the time to market its retail vacancy?

Taft: Of course, timing is everything. G.H. Palmer has been active in Downtown for more than a decade. They've seen changes and growth firsthand and not only weathered the recession, but thrived in spite of it—which speaks to the strength of Downtown's urban renaissance. From the firm's first foray into development in Downtown, the Medici, it has expanded to six luxury apartment projects which will ultimately total 4,338 residential units (two of the projects are currently under construction with delivery in 2014).

G.H. Palmer's focus has always been to build high-quality apartment projects in Downtown. They did not want to compromise the quality of potential retail tenancy, preferring to wait for the right tenants who would provide amenities to residents when market demand was ripe.  Downtown has evolved significantly since 2003 when the Medici was built, and now retail activity is hotter than ever.  With just over month of marketing the properties, we're currently talking to over 50 potential tenants—some interested in multiple locations.

As the Downtown population has grown over the years, G.H. Palmer properties have had occupancies at or near capacity for completed projects. Their properties' successes as well as population growth have created a stable residential base, improving the appetite for the retail portion of their assets.

GlobeSt.com: Any other last thoughts?

Taft: Downtown's entrepreneurial spirit is alive and well. Retail opportunities are abundant and everyone with a stake in the area is looking forward to seeing continued urban revitalization. The entire team in the Downtown L.A. office of Charles Dunn is pleased to share in and be an active participant in its renaissance.