Blog Post

Southern California’s Retail Market Benefits from Economic Improvement

The Southern California market is experiencing growth in many sectors, and the region’s near- and long-term retail outlook is good.

Southern California’s economy continues to enjoy steady improvement. The Los Angeles Economic Development Corporation (“LAEDC”) forecasts that the unemployment rate in Los Angeles County will decline from a peak of 12.5% in 2010 to 7.7% in 2015. The LAEDC also forecasts additional gains in consumer spending and population growth for all Southern California counties.

Garrett Colburn, senior vice president and market leader in SRS’ Newport Beach office, has observed that the area’s increasing economic health continues to attract new retailers to the area. “We are seeing new retailers and restaurants enter Southern California, including national and international players like Dunkin’ Donuts, ALDI, and Aki Home, and more regional players like Grocery Outlet and Raising Canes,” he said.

Some of the retailers already in the market that continue their aggressive growth in Southern California include Planet Fitness, Harbor Freight Tools, Sleep Number, Smart & Final, 99 Cents Only, Nordstrom Rack and Ross.

Fast Casual Restaurants, in particular, are active in the market. “We continue to see the ongoing burger wars playing out, and the pizza wars are not far behind,” said Colburn.

Burger concepts invading the market include Burger Lounge, Habit Burger, Smashburger, Sonic, to name just a few. The pizza restaurants expanding in the area include Blaze Pizza, Pieology, 800 Degrees, Fresh Brothers Pizza, MOD Pizza and Pizza 90, among many others.

Despite these expansions, the Southern California retail market is also experiencing closures and consolidations in some segments. Colburn pointed out that the mergers of traditional grocers like Safeway and Albertsons, office supply stores like Office Depot/Office Max and Staples and department stores like Sears, Kmart and JC Penney, all add to the inventory and movement in the market.

The area’s retail development pipeline includes some unique projects, some of which are being built around various retail sectors. “Food, fitness and entertainment uses are the most active categories that most landlords are building their projects around,” said Colburn.

Pacific City, Huntington Beach: Being developed by DJM Capital Partners, this project is a beachfront mixed-use development that will include 191,000 square feet of boutique and national retailers and restaurants, a public market, luxury residences and a boutique hotel. The project is scheduled to open in the 3rd quarter of 2015.

Outlets at San Clemente: Craig Realty Group is developing this project, scheduled to open this summer. Phase I of the project will consist of over 325,000 square feet and include more than 70 retail stores and about a dozen restaurants.

The Promenade at Downey: Alberta Development Partners has undertaken the development of this 600,000-square-foot project that will be anchored by a 155,000-square-foot super center and 300,000 square feet of additional anchor space. Tenants will include a fitness center, a 14-screen movie theater, 105,000 square feet of shops and 40,000 square feet of retail and restaurant pads.

As many U.S. malls are struggling elsewhere in the country, mall owners and developers in Southern California are taking action to revitalize their properties:

Laguna Hills Mall Redevelopment: Merlone Geier Partners, the new owners of Laguna Hills Mall, recently disclosed plans for an upgrade to the project that “better caters to the experience shoppers are looking for today,” according to a newsletter published by the City of Laguna Hills. The owners will add an open public courtyard and an upscale, dine-in movie theater.

Montclair Plaza Redevelopment: Owners of this mall, CIM Group, are working on a major overhaul of the property. Plans include re-tenanting the western side of the mall with upscale retailers and outdoor shopping and demolishing a vacant department store. According to the Daily Bulletin, “Also envisioned is a 16-18-screen movie theater and new restaurants.”

The improvement in Southern California’s retail market is expected to continue as new retailers come in and new developments take shape.

Written by Janie French, Director of Business Development