DTLA Retail Trends Way Above Nation

LOS ANGELES—If we couldn't before, we can now officially add retail to the list of sectors that have popped in Downtown Los Angeles. According to the latest report from the Downtown Central Business Improvement District, retail sales hit $2.8 billion, an increase of 34% since 2010.

"Retail growth has been relatively steady and it is grounded in the growth of Downtown in general," Nick Griffin, director of economic development at the DCBID, tells GlobeSt.com. "You could probably track it pretty directly to the increase in residential population. That growth is really where the increase in retail is coming from. The renaissance of Downtown Los Angeles was really a slow trickle up until just before the recession, and then right after, you see it start to take it off. That all really ties into the population growth in the market." Griffin didn't have data on year-over-year growth, so, while downtown is certainly trending above the nation, the year-over-year growth may be less significant, especially considering that 2010 was the first year out of the recession.

The market is trending well above the national average, according to the DCBID, which has seen flat or nominal retail sales growth nationally. According to Griffin, this is all linked to the increased population in the area. "This is a whole area that is growing in general, and so it is keeping ahead of the county, it is keeping ahead of the L.A. city and it is keeping ahead of the nation," he says. "Downtown has fundamentals of growth that are keeping a very steady pace because it is simply because it is a place where people want to be. In other markets where retail is being measured, they are not experiencing that kind of growth." Griffin didn't have data on year-over-year growth, so, while downtown is certainly trending above the nation, the year-over-year growth may be less significant, especially considering that 2010 was the first year out of the recession.

The growth in the downtown market isn't only fueling retail sales, it is also fueling retail development. The market has more than 1 million square feet of retail space and is attracting a broad range of retail types. "There are types of retail that succeed in different types of neighborhoods, and that has allowed all types of retailers to find a spot where they are going to be successful," explains Griffin.

Although the growing population has been the main driver of retail growth in the market, Griffin explains that Los Angeles residents and tourists are also migrating downtown to shop. "We are seeing people migrate to the downtown market. The downtown residential growth creates the base level of density that enables retailers to open in the market," says Griffin. "That is just a market maturing to its scale. What is more interesting from retail perspective is that a lot of retailers are drawn to the area because they are drawn to a more adventurous customer and they are looking to be more innovative themselves, and for those retailers, downtown makes sense for them."

The retail growth is a great for the ongoing renaissance; however, Griffin says that it will also help the market better endure a downturn because is has a built out amenity base. "I don't think that it has done that in an intentional way so much as it has hit a tipping point five years ago where the underlying fundamentals—from arts and culture to retail to housing—has become increasingly attractive and now that has its own momentum," says Griffin. "While it is not immune to downturns, it is better positioned to survive a downturn. It is much like New York; during the downturn, New York didn't take a hit, it took a pause because the big arc was towards growth and improvement. That is really tied to the global trend of people moving to urban centers."