Valley Area Retail Market Slowly Picking Back Up
By Yair Haimoff, Executive Managing Director, Spectrum Commercial Real Estate
The COVID-19 pandemic slowed or halted markets across the world. But how did Los Angeles fare? Well, the retail market slowed in 2020 as a result of the pandemic, but, fortunately, it is slowly picking up with reopenings and the adoption of the COVID-19 vaccine.
Looking back, recent transactions in the retail space have predominantly included food-related deals. With established fast food businesses like In-n-Out, Starbucks, Popeye’s Chicken, Chick-Fil-A and more showing more transactions, there is definitely a pattern of increased demand for services that support activities necessitated by isolation. However, there have also been deals that included gyms/fitness users, family entertainment, tutoring centers and a few other ancillary retail uses. It looks as if the reopenings are starting to bring in a renewed demand for more social activities, which, blended with the rise of fast food establishments, is a good sign the market is picking up.
Looking at current retail development activities, the local market has been mostly quiet in terms of retail-only centers. This makes sense, as retail stores suffered during the shutdown, with many existing retailers turning to curbside pick-up services to stay afloat. Many developers simply aren’t developing retail-only centers at the moment, but some have switched over to mixed-use developments that have apartments over retail. Other developments that have cropped up include hotel developments and, of course, drive-thru restaurant developments. Mixed-use projects are performing very well in general in the Valley. This shows that while the market evolved during the pandemic, developers have been able to get creative to meet demand and maintain profitability.
Retailers in the Valley have remained resilient during the pandemic. While vacancy rates have increased for retail sites, new mixed-use developments and drive-thru restaurant developments, in particular, have carried the market into the new normal. In the meantime, new concepts like small versions of Target and other brands are starting to trend, but it will take some time to determine if these concepts will continue to populate the market.