LOS ANGELES — It was a very good year for retail in Los Angeles in 2023. Walk up and down Rodeo Drive, and it’s hard to spot a “For Rent” sign anywhere.
Cruise over to the most popular section of Melrose Avenue and you will see a vibrant thoroughfare where the under-5 percent vacancy rate is unprecedented.
Stroll along Larchmont Boulevard, a walkable older Los Angeles neighborhood, and you will see packed sidewalk cafés and drivers jockeying for metered parking spots. One of the newest nameplates on the street is Beyond Yoga, while Catbird, a New York jewelry company with only one store in California, has a “Coming Soon” sign posted in its future store window.
“The retail streets are the best they ever have been,” said Jay Luchs, who specializes in high-street retail as vice chairman of Newmark Knight Frank in Los Angeles. “If you go to each street where the restaurant and retail traffic is strong, there are not a lot of vacancies.”
At the top of that list is Rodeo Drive, where LVMH Moët Hennessy Louis Vuitton controls a sizable chunk of real estate after a huge multimillion-dollar buying spree. “Rodeo Drive has come back very handsomely,” said Chuck Dembo, a partner in family-run Dembo Realty, headquartered in Beverly Hills. “Louis Vuitton has a big appetite, and they gobbled up spaces for all their brands. It’s like musical chairs.”
But even though it is the largest landowner on Rodeo Drive, not everything has gone well for LVMH. The French luxury company had planned to build a nine-story Cheval Blanc hotel at the top of Rodeo Drive. The Paris-based luxury fashion house bought three large buildings to make way for the hotel, of which there are only five in the world. But that development was voted down last spring by Beverly Hills residents. Now LVMH is left with three vacant structures to fill. Real estate observers speculate one of the larger buildings, the former Brooks Brothers building at 22,250 square feet, will become a retail location for one of the 14 LVMH fashion brands.
Meanwhile, Chanel opened a 30,000-square-foot store on Rodeo Drive in mid-2023, making it the label’s largest U.S. location. It was filled with elegant touches, including a lasso-like sculpture of 215 hand-blown glass beads resembling one of Chanel’s iconic pearl necklaces.
With little room on the street, real estate experts said Rodeo Drive rents have held steady in the past year at around $750 to $900 a square foot per annum.
Rodeo Drive’s success means the adjacent streets are grabbing more business and filling empty spaces. On Beverly Drive, one block away, a recently opened Erewhon Market specializing in organic food has led to a pedestrian traffic jam. “It’s like a mob scene,” Luchs said. “It is exploding out the door. From the smoothie line to the hot-food line to the checkout line. Tons of tables are full.”
Erewhon’s arrival has been a selling point to attract new retailers. The rapidly expanding Los Angeles label Reformation plans to open a 5,000-square-foot store on Beverly Drive in the space once occupied by Planet Blue. L’Agence, the L.A. contemporary fashion line, and Veronica Beard are new arrivals.
Melrose Avenue Is a Popular Shopping Street
Retail space is also getting scarce on the posher end of Melrose Avenue, an area that includes Melrose Place, west of La Cienega Boulevard. Vacancy rates remain at under 5 percent and rents haven’t fluctuated much from last year, fetching $180 to $240 a square foot a year.
Last year Gucci finally took over the former Marc Jacobs location at the corner of Melrose Avenue and Melrose Place to unveil its first ultra-luxe Salon store concept in L.A. with fresh-off-the-carpet gowns. In early 2023, Ami Paris opened a boutique at 8583 Melrose Avenue, which is Alexandre Mattiussi’s second store in the U.S. after he unveiled a venue in 2022 in Manhattan’s SoHo district.
Farther east on Melrose Avenue, vacancy rates remain at around 10 percent, and the rents have climbed from $70 to $80 a square foot per year to $72 to $96. Still, this price range is allowing newer and smaller brands to open their first L.A. stores. Lulus, a decades-old California women’s clothing brand that exited physical retail 15 years ago, made a big splash by taking over a 6,000-square-foot space on Melrose Avenue across the street from a Vivienne Westwood outpost and a block from the Instagrammable Paul Smith store with its vibrant pink exterior.
“There are a lot of spaces that have recently been leased here,” said Philip Klaparda, a real estate expert who covers West Hollywood as a partner with Dembo Realty. “They are under construction or are getting their plans and permits. So I think things are filling up here.”
But it is not all rosy on Melrose Avenue. At the end of December, the iconic Ron Herman store, which had been on the avenue for more than four decades and had an international following, shuttered its doors, leaving a sizable void in the Los Angeles retail world. Four years ago, Ron Herman retired and sold his business to Sazaby League Ltd., a Japanese company. Sazaby decided to reshape its operations, keeping its Ron Herman store in Honolulu as well as several outposts in Japan.
Better shopping malls with a modern feel are on the upswing too. Weekend crowds pack locations including Westfield Century City, where more stores keep opening. Century City saw 16 new outposts arrive in 2023, including Ba&sh, Vuori and Marine Layer. Coming next year will be Hugo Boss and Uniqlo.
Also on a roll are the Caruso-operated outdoor malls including The Grove, the Americana at Brand and Palisades Village, located in the upscale seaside L.A. neighborhood. “I think Palisades Village is one of the strongest centers,” said Andrew Turf, a senior vice president at CBRE, a commercial real estate company. “It happens to be in an area that is crime-free. Luxury is very much focused on that geographic area because people who don’t want to drive to Rodeo Drive shop there.”
At the open-air shopping village, there is a small central square and a Main Street vibe for brands including Brunello Cucinelli and Officine Générale as well as Brandy Melville and Alo Yoga. In 2023, Saint Laurent, Toteme and Bottega Veneta opened.
The Americana at Brand has been adding more luxury storefronts, too, with some 15 high-end brands opening there in 2023, including Saint Laurent, Gucci, Golden Goose and Byredo, while Amazon’s first experimental store incorporating an extra dose of technology closed in November.
Up the coast in Malibu, vacant store fronts are getting harder to find in shopping locations including the Malibu Country Mart and the Park at Cross Creek. But a new project is finally coming on board. The Ranch at Cross Creek has negotiated all its agreements with the city of Malibu. It has about 30 stores ready to rent, with planned openings for this summer. “There is not a lot left to lease in Malibu,” said Luchs, who is one of the leasing agents for the Ranch.
For 2024, optimism rules for higher-end retail expansion with interest rates expected to fall and consumers eager to expand beyond online shopping. Devin Klein, who handles high-end retail leases in Los Angeles for commercial brokerage Jones Lang LaSalle Inc., or JLL, has been busy giving tours around Los Angeles of prospective upscale store locations.
“We have executed a few deals with nationals over the last couple of weeks,” Klein said. “There are a couple of high-end fashion brands from Europe who have asked me to start looking for them in Beverly Hills. A few years ago, they put their search on hold, but they are back at it, wanting to solidify something this year.”
