Neil Shekhter -NMS- Southern California Maintained its Standing as a Premier Destination for Retail Growth and Expansion
SOUTHERN CALIFORNIA REPEATS AS THE BEST
The epicenter for retail development and progress is once again
Based on size, the tourism industry, and population growth, the
market conditions are ideal. The potential to exceed market
expectations on a national level can be found in robust sales as
reported by major retail companies. That does not mean to imply
that businesses have no obstacles to overcome. The stringent
processes for approval, and higher than average costs to rent
retail space are concerns for every company. But the consensus is
the pros outweigh the cons. The proof is in the profits. Simply
put, there is no better place than Southern California for retail
growth, according to Neil Shekhter, founder, and CEO of Santa
Monica-based NMS Properties.
Businesses enjoy a sense of stability, and the outlook remains
bright for the future. For property owners, space is in high
demand, and rental costs have increased. In addition, conditions
are good for the greater Los Angeles area with newly added space
and more in the developmental stage. Investors, retail businesses,
and developers are all enjoying the benefits of America's most
While unemployment in LA is higher than statewide and national
averages, the rate of unemployed in Los
Angeles County has greatly decreased since last year (50
basis points). Nearly 37, 000 non-farm jobs were created between
fall 2016 to 2017. These jobs included the construction industry,
finance, education, health services, professional, and business
service providers. On the other hand, government, jobs decreased.
CBRE Econometric Advisors (CBRE EA) predict in particular that
office-using jobs will experience stable, gradual growth. By
Countylost jobs in financial services, professional and
business services. The employment rate for the county was 3.8%,
down from 5.6% a year ago, Neil Shekhter points out.
LEASE RATE ANALYSIS
In the best news for property owners, the average price for renting
retail space increased by 9.3% during the past year. Today, the
cost per square foot is $ 2.71, an increase of $ 0.07. This is the
highest asking price to date. The areas in which the rental costs
were highest were found in West Los Angeles and Midtown Wilshire.
As expected, the cities of Venice, Santa Monica and Beverly Hills
were also near the top of the list. Until 2019, the forecast is for
rental costs to increase throughout southern
California, Neil Shekhter notes.
VACANCY AND NET ABSORPTION
The vacancy rate for greater Los Angeles remained at 5.2%. The
prediction is for that rate to remain near 5.0%. Developments due
to be completed and already preleased have renters watchful. In an
effort to slow rental costs, tenants have decreased their rate of
expansion. As activity decreases, businesses look for rates to
stabilize. For now, and the foreseeable future, control is in the
hands of property owners. Throughout the region, health and
fitness, grocery and discount occupants accounted for most tenants
renting larger space.
Of all the submarkets in the greater Los Angeles area, the highest
vacancy rate could be found in the Downtown submarket (11.1%). Next
is Antelope Valley at 8.3%. Both areas enjoyed reliable tenants and
no significant loss of renters. The vacancy rate was more
influenced by smaller properties that became unoccupied. Vacancy
decreases were most common for Mid-Cities and West Los Angeles.
Overall, the vacancy rate for the greater Los Angeles continued
unchanged, with more tenants demanding retail space. The lone
exceptions were Ventura, primarily caused by midsized vacancies in
Simi Valley, Camarillo, and Oxnard. On a positive note, a number of
lucrative transactions stimulating growth in the region included
large-scale space in Canoga Park (136, 325 sq. ft.), Huntington
Park (100, 135 sq. ft.) and West Covina (34, 000 sq. ft.).