The Los Angeles retail market in Q3 2025 showed stable activity, with vacancy holding around 6.0% and nearly 600,000 SF under construction to broaden future supply options. Leasing momentum was led by tenants seeking space in newer shopping centers and lifestyle-oriented projects, while older properties faced slower turnover. Retailers remained focused on securing high-traffic locations, especially in coastal and transit-oriented corridors, which continued to support competitive performance across those submarkets. Asking rents averaged $36.50 per SF during the quarter, with rent growth adjusting modestly at -1.2% year-over-year. While rent gains were softer than historic levels, well-located assets continued to attract strong interest, and investment activity totaled $556 million, underscoring steady confidence in Los Angeles retail fundamentals.

 

Key Findings

• Leasing demand is weak, with net absorption at -491K SF and availability at 6.0%, the highest in a decade, concentrated in older, less competitive properties.
• Market rents declined -1.2% year-over-year, lagging the national average, though Los Angeles still commands among the nation’s highest retail rates at $36/SF, with wide submarket variation.
• Suburban markets like the San Fernando and San Gabriel Valleys see modest rent gains, while urban hubs such as West Los Angeles and Santa Monica face declines due to higher availability.

 

Los Angeles Retail Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

L.A. Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.7%
• Current Population: 9,775,632
• Households: 3,500,486
• Median Household Income: $92,972

 

Los Angeles, the nation’s second-largest metro, has a diverse economy anchored by entertainment, international trade, aerospace, tourism, and creative industries, supported by top universities and a deep talent pool. While tech and media have seen modest improvement, employment remains below pre-2022 levels, and the entertainment industry faces ongoing challenges. Trade and transportation remain vital through the Ports of Los Angeles and Long Beach, though tariff policy adds volatility. Compounding these headwinds, the devastating January 2025 wildfires, with losses up to $54 billion, will weigh on growth for years as rebuilding unfolds.

 

Population, Labor, & Income Growth

Source: CoStar Group, Inc.

 

Los Angeles Retail Construction

Los Angeles has experienced limited retail development over the past decade, with inventory growing only 730,000 SF and the pipeline representing just 0.1% of existing supply, well below the national average of 0.4%. Redevelopment has been a key driver, with 5.9 million SF demolished in f ive years, resulting in a net inventory decline of 1.8 million SF. Developers often repurpose obsolete sites, such as 5420 Sunset Blvd., which will deliver 735 housing units and 95,000 SF of retail by 2026. Large-scale projects like the 400,000-SF Los Angeles Premium Outlets in Carson face delays, leaving Class A space in short supply.

 

SF Construction Starts

Source: CoStar Group, Inc.

 

SF Under Construction

Source: CoStar Group, Inc.

 

Los Angeles Retail Sales

In Q3 2025, Los Angeles retail investment remained steady, with sales activity highlighting both traditional centers and redevelopment opportunities. Quarterly sales volume reached roughly 10% above last year’s levels, contributing to a 12-month total of $3.1 billion. Private investors led acquisitions, making up the bulk of buy-side activity, while institutional players were more selective. Notable transactions included UNIMAT Commercial’s $69 million purchase of The Hollywood Collection along the Walk of Fame and CIM Group’s $44 million acquisition of District La Brea. Redevelopment strategies also shaped the market, exemplified by Melia Homes’ $13.7 million purchase in Hawthorne for residential conversion.

 

L.A. Retail Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Source: CoStar Group, Inc.

• Sales Volume: $556M
• Price Per SF: $412
• Cap Rate: 5.8%
• Vacancy Rate: 6.0%
• Rent Growth: (1.2)%
• Asking Rent Per SF: $36.50
• Under Construction: 598K SF
• Delivered: 118K SF
• Absorbed: (419K) SF