Los Angeles faces shortage of modern retail space as aging inventory dominates the market

Nearly 58% of retail inventory in Los Angeles was built before 1980, meaning more than half of retail space is at least 45 years old. Retail properties can have long lifespans, especially when landlords invest in renovations to attract new tenants. However, as demand in Los Angeles has dropped and many spaces remain vacant, landlords have had little motivation to update their buildings without prospective tenants. This is leading to a glut of old, outdated retail space on the market. At the same time, retail construction activity in Los Angeles has reached historic lows. This year, new construction did not exceed 150,000 square feet, compared to an annual average of 1.8 million square feet between 2015 and 2019. Since interest rates started rising in 2022, the average yearly construction starts have declined to 438,000 square feet — a 76% reduction.