L.A. Finds a Way to Cope With Massive Store Closures

Last year, 56 retail chains shuttered in Los Angeles. The impact on the retail market has appeared slowly, mainly manifesting has stagnated rental growth. While some of the space has been absorbed, mainly in primary retail markets, other spaces are being transformed into more fluid and experience-driven spaces. In some instances, that is multi-level stores and delivery elements that support an online component. To find out more about how the retail market is recovering from the major closures last year, and how that space is being absorbed, we sat down with Scott Burns, EVP and Los Angeles retail brokerage lead at JLL, for an exclusive interview.

GlobeSt.com: What does the shuttering of 56 retail chains in L.A. say about new trends in retail?

Scott Burns: The retail closures mean that Los Angeles is not immune to massive shift that is occurring in retail that is being driven by changes in both consumer preferences and technology.  Retail in Los Angeles will fare better than most other major metros due to its strength and dynamics of its demographic base and because it is a portal city that anchors the West Coast.

GlobeSt.com: How is the market dealing with or absorbing those vacancies? 

Burns: Overall it is going well, but it is a process.  The highest quality/urban non-mall retail space is being absorbed and in some cases in a competitive leasing environment.  Mall product and shuttered space in suburban and tertiary markets will move slowly, due market forces of higher supply and lower demand.

GlobeSt.com: How is brick-and-mortar adapting, especially for single-tenant or big boxes? 

Burns: Brick-and-Mortar retailers are being more creative with their layout and operational requirements.  We are watching retailers commit to multi-level stores, shared loading situations, and vertical transportation elements for their consumers.

GlobeSt.com: There has been a resurgence in retail development. Is there enough demand for retail development? 

Burns: Supply is up and demand is relatively flat, which has limited pure retail development.  The majority of the development in the Los Angeles market is being driven by housing as is part of mixed-use projects.
GlobeSt.com: Has the approach to retail development changed as a result of the evolving retail market? 

Burns: There really is no meaningful retail development. Most is centered around single tenant retail requirements or as part of mixed-use developments where the primary catalyst are the residential or creative office components.

GlobeSt.com: How will retail rents be affected by this new supply?

Burns: In general, market rents have remained flat and not seen a measurable impact from the current round of closures.  As they continue and supply increases, we will expect downward pressure on rents.

Last year, 56 retail chains shuttered in Los Angeles. The impact on the retail market has appeared slowly, mainly manifesting has stagnated rental growth. While some of the space has been absorbed, mainly in primary retail markets, other spaces are being transformed into more fluid and experience-driven spaces. In some instances, that is multi-level stores and delivery elements that support an online component. To find out more about how the retail market is recovering from the major closures last year, and how that space is being absorbed, we sat down with Scott Burns, EVP and Los Angeles retail brokerage lead at JLL, for an exclusive interview.

GlobeSt.com: What does the shuttering of 56 retail chains in L.A. say about new trends in retail?

Scott Burns: The retail closures mean that Los Angeles is not immune to massive shift that is occurring in retail that is being driven by changes in both consumer preferences and technology.  Retail in Los Angeles will fare better than most other major metros due to its strength and dynamics of its demographic base and because it is a portal city that anchors the West Coast.

GlobeSt.com: How is the market dealing with or absorbing those vacancies? 

Burns: Overall it is going well, but it is a process.  The highest quality/urban non-mall retail space is being absorbed and in some cases in a competitive leasing environment.  Mall product and shuttered space in suburban and tertiary markets will move slowly, due market forces of higher supply and lower demand.

GlobeSt.com: How is brick-and-mortar adapting, especially for single-tenant or big boxes? 

Burns: Brick-and-Mortar retailers are being more creative with their layout and operational requirements.  We are watching retailers commit to multi-level stores, shared loading situations, and vertical transportation elements for their consumers.

GlobeSt.com: There has been a resurgence in retail development. Is there enough demand for retail development? 

Burns: Supply is up and demand is relatively flat, which has limited pure retail development.  The majority of the development in the Los Angeles market is being driven by housing as is part of mixed-use projects.
GlobeSt.com: Has the approach to retail development changed as a result of the evolving retail market? 

Burns: There really is no meaningful retail development. Most is centered around single tenant retail requirements or as part of mixed-use developments where the primary catalyst are the residential or creative office components.

GlobeSt.com: How will retail rents be affected by this new supply?

Burns: In general, market rents have remained flat and not seen a measurable impact from the current round of closures.  As they continue and supply increases, we will expect downward pressure on rents.