In the 3Q17, Downtown Los Angeles attracted several new retailers. COS, Nordstrom Rack and Sweetgreen all signed new leases in the market; however, despite the new retail leases, the vacancy rate in Downtown Los Angeles increased 15% year-over-year in the third quarter, according to the newest report from the DCBID. Nick Griffin, VP of economic development at the DCBID, attributes the meek performance to competition from ecommerce as well as new retail development.

“You have a lot of space coming to market. There are significant and large scale retail spaces coming to the market, like Row DTLA,” Griffin tells GlobeSt.com, adding that ecommerce competition is driving much of the vacancy. “It is no secret that bricks-and-mortar retail is hurting everywhere,” he says. “In the most dynamic markets in the country, there are a lot of vacancies. It is a challenging time for bricks-and-mortar retail. I think that is a major driver of the retail vacancy. With that being said, in Downtown Los Angeles, I think that we have been able to maintain the rent levels that we have.”

The vacancy rate for the third quarter was 4.6%, however, rental rates increased 2.4% year-over-year to $2.57 per square foot. The increase in rental rate is a good sign for the future of the market, and Griffin says that Downtown Los Angeles is well positioned to combat competition from ecommerce. “The reason that I am bullish on the foreseeable future with retail downtown is because we offer what retailers need, which is a unique experience,” he says. “The reason that consumers will continue to go to stories is if it is a great experience. It needs to be interesting and cool, and it needs to offer delicious food and a place to hang out with friends where you can go to a bar afterward. That is what downtown has, and that is its advantage over other areas. Top shopping centers in top urban districts are doing fine, the ones that are hurting are the ones in outlying areas. I think that Downtown offers what the next generation of retailers want.”