Suburban Vacancies Hold Below Metrowide Mean; Catalysts for Recovery Surface in Employment Hubs
Largest locales display positive momentum. The recent performance of Los Angeles County submarkets has emulated the broader national trend of suburban retail outperforming the CBD. Over the past year ended in March, the San Gabriel and San Fernando valleys each recorded vacancy compression, with both submarkets entering the second quarter with availability below the metrowide average of 5.8 percent. Tightening conditions and positive absorption here and in Burbank-Glendale-Pasadena are supporting above-average rent growth, with the latter suburban locale home to the lowest vacancy rate among metro submarkets with at least 20 million square feet of inventory. Moving forward, near-term supply additions will be minimal across the San Fernando Valley region, while deliveries in the San Gabriel Valley are mostly accounted for, a boon for existing suburban properties with available space. Foot traffic poised to improve in office-heavy locales. Contrasting suburban submarkets, Downtown Los Angeles and tech-centric West Los Angeles each noted vacancy increases of 90 basis points during the past 12 months, pushing local availability to 7.0 percent and 6.7 percent, respectively. Still, avenues for near-term recovery have emerged. Professionals that work in these submarkets are returning to some form of in-person operations in greater force, reviving midweek foot traffic. Additionally, apartment demand in both areas was historically strong over the past year, a trend that will lift local consumer demand for necessity-based shops and dining.