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Report Sees Rough Times for Retail Properties

LOS ANGELES-Marcus & Millichap says a slowing economy and a glut of new retail construction will push the county's vacancy rate higher in 2002 while keeping a lid on rents.

By David W. Myers | Updated on November 30, 2001

LOS ANGELES-The county’s retail-property market is finally beginning to show signs of weakening, a new report says, and the area’s slowing economy will take an even bigger toll in the year ahead as vacancies rise and rents flatten.

The report was prepared by researchers at Marcus & Millichap Real Estate Investment Brokerage Co. A glut of new construction and slow leasing activity will push retail vacancy rates next year to 6% from today’s 5%, the report says, while rent growth disappears as owners compete for the dwindling number of expansion-minded tenants.

There won’t be an all-out crash like the one that accompanied the early 1990s recession, according to Stephen Stein, Marcus & Millichap’s regional director. But “the market will see definite softening as local retailers struggle through the next year and developers continue to add more space than the market can absorb,” he says.

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