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Friday, Jun 9, 2023

High Prices Elsewhere Drive Investors to Valley

Record high listings for retail properties in downtown Los Angeles and the Westside could spur investors seeking lower prices to look to the San Fernando Valley, according to a report from Calabasas real estate brokerage firm Marcus & Millichap Inc. “Many areas throughout Los Angeles have experienced solid growth,” said Marcus & Millichap Senior Director Brandon Michaels. “And as a result, retailers have benefited, and vacancy rates have remained stable and low.” Retail vacancy across the L.A. metro area has sat at just under 5 percent for the past four years as retailers have added store locations in anticipation of increased consumer spending. This has pushed up prices as more investors are eager to acquire storefront and mixed-use buildings in developing neighborhoods such as Mid-Wilshire. Buyers in these areas can expect 3 percent to mid-4 percent first year returns, compared to 4 and mid-5 percent in the Valley. Looking forward, expect the vacancy rate across the entire metro area to hit 4.1 percent by the end of the year, allowing property owners to raise rents by 4.2 percent overall to an average of $32.17 a square foot, according to the report. The firm predicts employment to rise 1.2 percent as employers create 53,000 jobs this year, including 10,000 new positions at retail firms. Los Angeles fell two spots to 10th overall in Marcus & Millichap’s national retail index, which ranks 46 metro areas based on employment growth, vacancy, construction and rents. Seattle, San Francisco and Boston ranked at the top of the list. Valencia’s New Shops Sears may be leaving Westfield Corp.’s Valencia Town Center in April, but since November, the Santa Clarita mall has five new shops, restaurants and a live entertainment venue. New tenants include family-style restaurant Saddle Ranch Chop House, craft brew pub the Dude’s Brewing Company, music hall the Canyon Santa Clarita, children’s entertainment center House of Bounce and beauty salon Anthony Vince’ Nail Spa. A jewelry store called Pandora is also set to open this summer. “The fact that Westfield Valencia continues to welcome great shops and restaurants clearly speaks to the vitality of this destination,” said Corrine Barchanowicz, Westfield Valencia’s senior general manager, in a statement. “In addition to these latest openings, in the near future we look forward to introducing new offerings for children, a fresh juice bar, and even a designer brand from Asia coming to the Santa Clarita Valley for the first time.” Even as large retailers such as Sears and J.C. Penney Co. close anchor stores at shopping centers across the country, the recent openings in Valencia show there is still a demand for smaller, independent retailers at regional malls. A recent study by management consulting firm McKinsey & Co. recommended that malls focus on becoming centers for a local community by a providing a “curated mix of smaller stores that add a sense of novelty to the mall offering.” Mujosh in Glendale Trendy eyewear brand Mujosh is opening a new retail location this month at the Glendale Galleria mall. The opening is a part of the Hong-Kong-based company’s initial expansion into the United States, along with two stores in San Francisco. Mujosh was founded in 2010 and has over 800 stores in China, Southeast Asia, Australia and Canada. It incorporates high fashion concepts into the design of its sunglasses and frames. Last month, competing eyeglass retailer Warby Parker opened a store in Glendale at 232 S. Brand Blvd. Originally an online-only retailer, the New York-based company has found success in the L.A. market with stores in Venice, West Hollywood and downtown Los Angeles. A report by Persistence Market Research found that the global eyewear market was valued at $90 billion and will grow to $170 billion by the end of 2026. Non-prescription sunglasses made up 47 percent of the total market share, according to the report. Staff Reporter Ethan Varian can be reached at (818) 316-3130 or evarian@sfvbj.com.

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