Market Reports

By John R. Read, Senior Vice President, CBRE National Retail Partners-West It’s critical to go back to the basics in times of ever-increasing uncertainty. It is not new news that we are currently seeing inflation at a 40-year high, significantly higher interest rates and weaker economic growth expectations, including more talks of a pending recession, which is driving uncertainty in the U.S. market. These factors require us to consider a market’s fundamentals. For attractive fundamentals, look no further than Orange County’s retail market.  Orange County’s unemployment rate was 2.7 percent in April 2022, down from a revised 3.1 percent in March 2022, and below the year-ago estimate of 6.8 percent. With California’s unadjusted unemployment rate at 3.8 percent and the nation at 3.3 percent (for the same period), Orange County outperformed both metrics.  The county’s leisure and hospitality sector added 6,200 jobs, with 74 percent of these added between March and April of 2022, the most job additions of any sector. Food services and drinking establishments provided most of the employment increase in the subsector, with 4,000 more jobs. Arts, entertainment and recreation also added 1,600 jobs. Orange County boasts about 1,246 arts, entertainment and recreation destinations, along with 7,993 accommodations and …

By Chad Iafrate, Executive Director, and Phil Lyons, Managing Director, Cushman & Wakefield Retail leasing and investment sales transaction volumes continue to increase in 2022. This growth trend began to surge in the second part of 2021 following the pandemic recovery. Retail vacancy rates in San Diego County have decreased quarter over quarter to 5.9 percent, with vacancy lowest among power centers and strip centers. Asking rental rates, meanwhile, have increased across the county. This is primarily driven by significant rent growth at lifestyle centers (+5 percent from the previous quarter) and neighborhood centers (+2.8 percent). All major retail use categories seem to be back in expansion mode after four consecutive quarters of positive absorption. Pent-up consumer demand, stimulus and liquidity have all helped fuel growth plans in the retail sector with tenants continuing to try to make up for the lost year during the 2020 pandemic-related lockdowns.  Suburban shopping centers have been the beneficiary of the work-from-home model as employees who would typically frequent retailers near their offices have pivoted to restaurants and shops closer to their residences. Investor confidence in retail centers also continues to increase, most notably from rising REIT activity and exchange buyers. Local retail investment …

By Nellie Day All of Los Angeles County might have been under the same restrictions throughout the pandemic, but their emergence from this period reveals a lot about the localized retail environments.  “Los Angeles’ retail market has weathered COVID better than many other markets around the country,” says Matthew May, founder of May Realty Advisors in the Los Angeles submarket of Sherman Oaks, Calif. “However, the recovery has favored a diverse group of suburban markets.” Certain Suburbs Stand Out Markets like East Hollywood/Silver Lake, Inglewood/South LA and Santa Clarita boasted the highest 12-month rolling net absorptions in the county, according to CoStar — something May doesn’t believe was expected. “LA is known as a melting pot and this is reflected in the geographic and ethnic makeup of the top submarkets based on net absorption,” he says. “Vacancies in many of the suburbs were substantially less than in the Central Business Districts and tony retail areas from Beverly Hills to Abbott Kinney. These emerging markets were quite a surprise.” On the other hand, metro markets like Santa Monica, Downtown LA and Koreatown each had more than 100,000 square feet of negative absorption. Santa Monica’s Third Street Promenade has been one of …

By John Hickman, Managing Director, NewMark Merrill San Diego may be California’s second most populous county, but you wouldn’t know it by strolling through one of its many business districts. The county has grown up since its early days as a small military outpost, yet today its hundreds of communities and neighborhoods still impart a small-town feel. The retail real estate market reflects an intimate beach town vibe with a tightly knit brokerage and landlord community. Brokers and investors can cover the market with a limited footprint, while many retailers can achieve a major presence with a handful of locations. This is opposed to the dozens of locations they may require in other California markets, such as Los Angeles, Orange County and the Bay Area. And big, national brands aren’t the only retailers finding success — 98 percent of firms in San Diego are small businesses. Retailers in San Diego are open to taking chances on new concepts and structuring different types of leases. They’re also willing to pay slightly higher rent to gain access to the area’s strong demographics and limited supply of new shopping centers. This uniqueness provided resiliency during the pandemic and will contribute to a thriving …

By Glenn R. Rudy, Senior Managing Director, Retail Capital Markets, Newmark We all know the commercial real estate industry is cyclical and there are casualties in every cycle across asset classes. However, retail seems to always be in everyone’s crosshairs. It quite frequently is the tail wagging the dog across institutional investors. Consider this, though: if there is one thing the pandemic has proven (once again), it is that the retail sector as a whole is one of the most resilient in the industry. Nowhere in the country is this statement more evident than here in Orange County. While investment sales activity was sluggish overall in 2021, picking up largely in the fourth quarter, retail leasing activity was record breaking. Annual net absorption turned positive after nine consecutive quarters of losses. Vacancy rates have not yet returned to pre-pandemic levels, but rent growth has reach a new all-time high as of year-end 2021. Tenants and landlords were both motivated to sign leases in 2021 to satisfy the increased market demand from consumers yearning to get out and be social again. Society wanted to spend its money on soft goods, dining out and enjoying the retail experience that was so sorely missed in 2020. On the investment …