By  on May 20, 2013

In a city ruled by cars, where will shoppers pull over?

That’s always been the most important question for retailers locating in Los Angeles, the diverse entertainment hub that’s the nation’s second-biggest city and the largest in its most populous state. Retailers are homing in on profitable sites on streets that are constantly sorting out the right mix of stores, parking spots, tourist and local clients, ambience and attitude to maximize retail performance.

One thing’s certain: There’s no shortage of retail activity. The Location Group reported 30 important fashion store openings last year, and the list of openings this year is quickly mounting — Tommy Hilfiger, Céline, Sandro, Velvet, L’Agence, Isabel Marant, CH Carolina Herrera, Equipment, AllSaints, Acne Studios, Calypso, Theory and Alice + Olivia are among the stores that have already or will soon set up shops in the Los Angeles area.

“Things are better than they have been for five years,” said Jay Luchs, executive vice president at commercial real estate advisor Newmark Grubb Knight Frank. “Tenants are signing long leases — 10-year deals with five-year options — and not trying to get a year free.”

Steve Algermissen, executive vice president at Colliers International, concurred: “Over the last two years, the market has improved dramatically in terms of occupancy, tenant sales and new entrants.”

Rodeo Drive is as coveted as ever, and brands are doubling down on the street by upgrading and expanding stores. Christian Dior, Brioni, Hermès, Van Cleef & Arpels, Bulgari, Prada, Ermenegildo Zegna and Valentino are a few that have recently redone or relocated their Rodeo Drive stores. Saint Laurent and Louis Vuitton are revamping locations, and Burberry, Charlotte Olympia, Tory Burch and CH Carolina Herrera are coming soon. With little to no vacancy, Luchs said rents on Rodeo Drive are heading as high as $540 a square foot yearly.

Rodeo Drive is the hub for luxury brands, but the contemporary landscape is more complicated. Before the recession, Robertson Boulevard was a hot street. Its status has ebbed, although it does continue to draw brands. Tommy Hilfiger opened on Robertson in February, and at the time, the designer praised the street because it’s “between aspiration and accessibility.”

“What you’ve seen is that the rents over on Robertson have remained consistent, and it is expensive,” said real estate broker Chuck Dembo at Dembo Realty. “It is between $15 and $20 a square foot [monthly, or $180 to $240 a square foot annually]. It still has a good collection of stores, but it has lost the spotlight, fashion- and image-wise.”

Melrose Place, often praised for its beautiful setting and criticized for its lack of foot traffic and sales, fell in popularity with the downturn but appears to be on the rise with the revival. Equipment, Joe’s Jeans and Isabel Marant opened there, and L’Agence and Bottega Veneta will do so in coming months. Rents on the street range from $60 to $100 a square foot annually.

Beverly Drive in Beverly Hills and Abbot Kinney in Venice are gaining momentum in the contemporary fashion sector. David Arbuthnot, chief executive officer of Gant U.S., explained Gant settled on Abbot Kinney because the brand was keen on “something that had a neighborhood feeling.” With AllSaints, Scoop, Intermix, Theory, Sandro, Alice + Olivia and more lining up to be on Beverly Drive, Patrick Valeo, president and chief operating officer of the American arm of the French brands Sandro, Maje and Claudie Pierlot, called the street a powerful “contemporary row.” Yearly rents on Beverly Drive are $120 to $144 a square foot, and Abbot Kinney’s are roughly $100 to $150.

“You’re getting a quality of retailer that never existed on Beverly Drive before and never trusted a street other than Rodeo,” said Robert Cohen, president of Southern California for retail leasing and investment sales brokerage RKF. He cautioned, however, “The verdict is still out on how that market is going to transition to a contemporary fashion market.”

There are plenty of areas in Los Angeles that brokers and retailers expect to pop as locals seek out stores in their vicinity, among them Brentwood and downtown Los Angeles, often cited as having potential to become fashion destinations. Brentwood Country Mart, home to Jenni Kayne, James Perse, Broken English, Space NK and Kendall Conrad, has proved affluent Brentwood and Santa Monica shoppers will part with money in their backyard, and it has drawn retailers like Scoop to locate nearby. Cohen said rents on San Vicente Boulevard in Brentwood run from $50 to $90 a square foot yearly.

Downtown certainly remains risky but is a cheaper bet: Yearly rents are as low as $25 to $40 a square foot. Despite perennial skepticism about the possibilities for retail in downtown Los Angeles, Cohen assured, “It’s absolutely real. There are some great buildings downtown. They are gems and still have very low rents.”


Los Angeles County
10 million
Population change: +0.5 percent, past year; +3 percent, past five years.
Projected population, next five years: 10.43 million by 2018.
Per-capita income: Nearly $28,000
Key industries: Apparel manufacturing, banking and finance, entertainment, education, health services, technology, construction
Neighborhoods where growth is coming: Los Angeles, Calabasas, Hermosa Beach, Arcadia, Bellflower, Downey, Santa Clarita, Palmdale, Manhattan Beach, South Pasadena, Torrance,Temple City, Santa Monica
Number of malls/major centers: 150 in Los Angeles County
Major retail developments: 10 this year and next between 400,000 and 1 million square feet, including Azalea in South Gate, The Boulevards at South Bay in Carson and The Outlets at Tejon Ranch in Tejon Ranch
Other major construction projects: Multibillion-dollar development program at Los Angeles International Airport; Wallis Annenberg Center for the Performing Arts in Beverly Hills; I-405 Sepulveda Pass improvements; Westside Subway Extension; Middle Harbor Redevelopment Project, Port of Long Beach

Sources: U.S. Census Bureau, Directory of Major Malls


In just three blocks, the convergence of luxury on Rodeo Drive is virtually unparalleled. Retailers there are responsible for a large chunk of the more than $1 billion in retail sales Beverly Hills stores generate each year. New Rodeo Drive entrants are few and far between as space remains incredibly tight. Those that do squeeze in — Céline and Malo are newcomers, and next up is Tory Burch — further cement Rodeo Drive’s high place in the global pantheon of great retail districts. The investment being made by brands into their existing Rodeo Drive stores also signals the ongoing commitment to the street. Christian Dior, Brioni, Hermès, Van Cleef & Arpels, Bulgari, Prada, Ermenegildo Zegna and Valentino have spent millions on remodels to put their best foot forward there.

“Rodeo Drive has never been better,” said Jay Luchs, executive vice president at commercial real estate adviser Newmark Grubb Knight Frank. “There are tenants doing $20 million to $50 million in sales a year. It is the first time everyone has been this positive.”

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