The Retail Revolution in Los Angeles
By Richard Cheng
The Growth of Lifestyle Centers
The retail market in Los Angeles is made up of many shopping destinations such as malls, lifestyle centers, and strip centers that total 192 million sq feet. During 2017, lifestyle centers gained popularity because of their open-air design and layout, which included hip and trendy restaurants, smaller sized retailers, apartments, offices, and entertainment options. These centers also resembled city streets, which made them more appealing than the traditional shopping and strip mall experience. Because lifestyle centers did extremely well in 2017, rental prices increased by more than 63%, up to $50.46 per square foot, compared to Q4’2016. To this day, this success has caused an overall decline in vacancies among lifestyle centers.
Latest Happenings in The Retail Market and Economy
Due to the flat movement in rental prices, many retail stores have either closed or changed their sales tactics. In areas with little to no foot traffic, large retailers have closed their doors due to under performance and instability. Businesses that have offered discounts and off-price retail have found more successes in the changing market.
Yet despite the recent closures and flat rental rates, there is still an expectation that retail stats will improve. Because of the increase in demand for pure internet concept retailers and e-groceries growth is expected throughout 2018. This growth is correlated with consumer spending which thrives in a growing economy. Additional metrics such as unemployment at an all-time 17-year low, consumer confidence index at a 17-year high, and increased wages by 2.5% from the prior year only bolster this positive prediction.
Retail Activity in Downtown Los Angeles
The construction boom in downtown Los Angeles is still in full effect. There are 1.2 million square feet of retail space currently under construction, with another 2.5 million square feet proposed to take place in the near future. The new developments are said to be mostly mixed-use projects.
One such project that is under construction is the Oceanwide Plaza by Beijing developer Oceanwide Group. This three-tower project located in South Park will contain 153,000 square feet of retail space, 504 condominiums, and a 184 key Hyatt Hotel. The expected completion of this project is early 2019. Another project expected to be completed before the end of 2018 is Circa. This development includes two 35-story towers, over 600 apartments, and 48,000 square feet of ground-level retail space. Finally, the second phase of the Metropolis condominium complex is still in the works, which will also deliver significant retail space and condominiums to the area.
Strategies Employed by Malls To Increase Shoppers
Malls are increasing their efforts to attract customers to come out and shop in-person, rather than shopping from their computers. For example, Westfield’s Century City Mall made several additions and improvements recently. They added a more diverse mix of tenants, upgraded the movie theater, renovated the grocery store, added a luxury gym, an outdoor dining area, and a variety of new fashion retailers. Their $1 billion renovations landed them a health clinic and a live entertainment event space as well.
The highlight for many return shoppers and future shoppers was the addition of Eataly, a staggering 67,000 square foot Italian marketplace, containing a plethora of restaurants. Eataly was designed with the foodie in mind. It gives you the ability to dine in, take cooking classes, and purchase ingredients in order to replicate meals at home. In order to survive, shopping mall owners will need to adapt to attract new consumers.
What The Future of Retail Looks Like
Online shopping may be convenient, but it lacks a personal touch. A brick and mortar store provides face-to-face interaction with sales associates, the ability to try on and test products out, return items simply, and gives you the chance to walk around and have an enjoyable shopping experience.
Another advantage that brick and mortar stores have over online shopping are the popular pop-up shops and events that create retail shopping excitement. These stores are temporary in nature, oftentimes seasonal, or are needed to showcase the latest trends. They help build and gauge interest in a product or service and tend to be fun and interactive. One thing is for sure, with these changes in retail shopping, the retail revolution is in full swing.