Greetings,
This is Manuel Angeles with Exp Commercial.
Here is an update on the current Commercial Retail Real Estate Market in Los Angeles County as of March 10, 2024:
Transaction activity continues to moderate as investors adjust to the effects of higher interest rates. Sales volume remains docile through 2024, after edging out just $3.3 billion in 2023. Much of last year's activity came in the first quarter when many buyers and sellers were looking to avoid the ULA transfer tax increase in the City of Los Angeles. Auto dealerships and owner/user sales account for a large proportion of trades in recent months, such as Brandon Steven Motors' acquisition of the Win Chevrolet dealership in Carson for $47 million in October.
Price discovery is underway and a growing number of properties have traded for less than their acquisition prices, yet most have benefited from long-term appreciation. The properties selling for less than their acquisition prices are mostly involved in opportunistic or value-add investments below $5 million. At the same time, however, many sales under this amount continue to involve private investors in all-cash deals, and these investors are less sensitive to interest rates than those involved in larger sales.
Meanwhile, single-tenant net-leased continue to trade at high prices. For example, the 12,500-SF Trader Joe's store in Agoura Hills sold for $13.6 million in December 2023 at a 4.19% cap rate, just less than 20 basis points above the average yield on a 10-year treasury during the same month. Trader Joe's recently signed a 10-year lease extension with two additional five-year options.
Malls were highly sought after by investors in 2022, but recent sales have demonstrated valuation losses. As an example, Centennial Real Estate acquired the 1.2 million-SF Valencia Town Center in September 2023 from Unibail-Rodamco-Westfield for $199 million, or $172/SF, including the debt assumption of $195 million. The seller had stopped making loan payments earlier in the year.
The market price, which represents the average estimated price of all retail space in the market, has been flat over the past 12 months but has grown by an average annual rate of 3.2% over the past five years. Over the same period, price appreciation has been strongest in submarkets across the San Fernando Valley, Antelope Valley, and Inglewood/South LA. These submarkets have had the strongest demand for space due to their outsized concentration of neighborhood centers. In contrast, some of the most expensive submarkets, such as Beverly Hills, Century City, and Hollywood, have experienced lower price appreciation. Demand for space has been softer here due to the slow recovery in tourism and a lower daytime working population.
Upward pressure on cap rates is expected to remain through the end of the year, as last year's rise in interest rates has had an extended impact on the market. However, vacancies in the market have likely peaked, and rent growth should remain positive, helping drive higher net operating income.
Here are several graphs illustrating the current retail market in Los Angeles County:
Full Los Angeles County Commercial Retail Market Report Here: https://d2saw6je89goi1.cloudfront.net/uploads/digital_asset/file/11...
Access Exclusive Commercial Real Estate Market Reports in The United States Here: https://www.manuelangeles.com/
Contact me for a complimentary market analysis and valuation report for your commercial property, along with up-to-date commercial real estate listings (on-market and off-market): https://api.leadconnectorhq.com/widget/bookings/maexp
Thank you.
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Best Regards,
Manuel Angeles
Broker Associate
CalDRE #01985856
Mobile: (323) 900-5258
Email: manuel.angeles@expcommercial.com
Website: www.manuelangeles.com
Address: 155 N. Lake Avenue, 8th Floor, Pasadena 91101
Exp Commercial of California, Inc.
CalDRE #02134436
Office: (855) 451-1236, ext 300
Website: www.expcommercial.com
Address: 2603 Camino Ramon, Ste 200, San Ramon, CA 94583
| Commercial Real Estate Brokerage: Multifamily, Retail, Office, Mixed-Use, Industrial, Hospitality, Self-Storage, Land |
