Are Multifamily and Retail Carrying Downtown LA?
Retail and multifamily lead activity has come back in Downtown Los Angeles is a positive way and both sectors are fueling the next phase of the renaissance and driving growth within other sectors as well.
According to DCBID’s recent quarterly research report, multifamily occupancy increased 9.4 percent up to 94 percent with rents up 4.1 percent to $3.06 per square foot. Retail vacancy rates fell more than 14 percent down to 4.1 percent with lease rates up 3.6 percent to $2.57 per square foot. Both sectors faltered slightly in 2017, but have made positive comebacks in 2018 and have continued to propel the market overall.
The LA Multifamily Market
The multifamily market has been a driver of growth in the LA market for a long time and this is expected to continue in the future. There has been a large number of deliveries to the LA multifamily market and the market quickly absorbed them. After the quick dip in the market at the end of 2017, the market rebounded and reached above 94 percent occupancy and all-time high rental rates by the end of Q2 2018.
LA Retail Market
The retail market in LA is comparable to the multifamily market. In the second quarter, leasing activity was up 203 percent with 113,000 square feet of total absorption. As the residential aspect of LA grows, the retail sector benefits. CRE experts expect to see continued diversification in the retail market in LA. Downtown LA has started to attract major retail brands.
The increased retail activity including chains like Nordstrom Local opening a new store at The Bloc and Apple establishing a flagship store at the Tower Theatre will serve as a tipping point resulting in a domino effect up and down Broadway, which is pegged as one of Downtown LA’s prime retail corridors.
This type of retail activity will fuel the growth in the remainder of the market. The residential sector has helped to mold the market and bring residents to establish roots in Downtown LA. Along with the increased multifamily activity, the sales prices of condos have increased by 23.7 percent to $654 per square foot.
Retail & Multifamily Serve as Catalysts for LA
The multifamily and retail sectors are what really shape and create a neighborhood. For a long time, retailers didn’t want to open in Downtown LA because people did not want to live in Downtown LA and people did not want to live in Downtown LA because there were no amenities they could take advantage of. Once there was a solid residential presence, retailers followed and began establishing a large footprint in Downtown LA. Once the multifamily and retail sectors were well-established, developers, businesses and investors began to follow suit and show interest in Downtown LA.
The Future of Downtown LA
Real estate professionals see no sign of a slowdown in the multifamily and retail sectors in Downtown LA. Because of these two robust sectors, Downtown LA has re-earned its title as the heart of the city.