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April 24, 2024
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New Labor Law, Rising T.I. Costs and More – JLL Pros Comment on Retail in Los Angeles


Real estate services firm JLL recently released two retail reports – one on the overall retail outlook and the other a grocery report. Below is a Los Angeles-centric perspective on both topics provided by three of the firm’s pros in Los Angeles.

LA Retail Outlook: Comments by Blake Kaplan, JLL Managing Director in Los Angeles

• Many expanding retail brands will be put on the franchise model including fitness, beauty, healthcare, etc.
• Many expanding restaurants are coming from corporate groups as they prefer second generation space to lower the build-out costs within the current environment
• It is tough finding a high-quality second generation restaurant space these days
• Once the new labor law goes into effect in April, labor will be a huge issue for the market. Quality of labor will really change in the retail industry
• Landlords are being selective with fitness and entertainment tenants because of TI expenses rising
• Not much retail development because of the costs, i.e. construction, labor, cost of land, CAMs, and triple net expenses which are growing more than rents in some cases.

LA Grocery Sector: Comments by Francesca Howard, JLL Vice President in Los Angeles, and Ken Shishido, JLL Senior Vice President

• We continue to see requests to add smaller format grocery stores for convenience purposes to further anchor retail centers (Howard).
• Because of the dense population of the greater L.A. metro, operators have tested out various sized stores and offerings from very upscale with a wide range of high quality prepared foods, to traditionally-sized full line grocery stores that one would expect to see in suburban markets (Howard).
• Sprouts continues to be active in Southern California, and is making its appearance in untested SoCal markets like Victorville in the high desert and Lawndale in the South Bay (Howard)
• Ralphs, Vons, etc. are not expanding as much as everyone else. (Shishido)
• Ethnic (Asian, Hispanic, Mediterranean markets), discounters (Aldi, Grocery Outlet), niche players (Trader Joes, Sprouts) are all expanding in our markets (Shishido).

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