New store construction in L.A. this year is the lowest in decades
Los Angeles saw multi-tenant space vacancy decline by 50 basis points to 7.3% in June, with several retailers moving into recently-vacated big boxes.
While more than 600 lease commitments were signed across neighborhood and strip centers in the first half of 2026, open space is scarce downtown, however, and the situation promises to remain the same for some time to come, according to Marcus & Millichap’s Q3 Retail Market Report on the city. Retail inventory has expanded by just 162,000 square feet by June. Downtown L.A., the Westside Cities, and San Fernando Valley recorded no new supply.
“Los Angeles retail fundamentals are showing signs of improvement as limited new supply and active leasing help bring supply and demand into better balance,” said Tony Solomon, M&M’s senior managing director and market leader.
“Shopping center vacancy has declined, and improving office and apartment occupancy could provide additional support for retail demand across urban corridors,” he noted.
Other highlights in the report:
- Average asking rent is forecast to reach $32.35 per square foot by year's end, down 1.5% year over year. Shopping center asking rents declined by $3 per square foot over the past six quarters.
- Sales activity increased by 18% year over year during the 12 months ended in June. Second-quarter transaction volume reached its highest level since summer 2022.
- The metro added 18,500 jobs during the first half of 2026, after losing 5,000 positions during the prior six months. Health services led job growth, with additional gains in hospitality and food services.
Marcus & Millichap predicts that limited construction and continued leasing activity should create opportunities for well-positioned retail brands.
But there were no hoorays for Hollywood.
“The migration of film and television production to competing markets has created challenges for retailers in some entertainment-oriented districts,” noted Solomon. “Investors are increasingly focused on submarkets supported by strong residential density, neighborhood-serving retail demand and diverse employment drivers.”
