The retail sector in Los Angeles County has shown signs of adaptability in the third quarter of 2023, with some potentially promising signs for investors. One property that has hit the market is the 11,859 square foot retail asset at 10781-10789 West Pico Blvd. in West Los Angeles. The building is located on 0.5 acres of land and is for sale for $10.9 million, or approximately $919 per square foot.
The marketing efforts are led by Hanley Investment Group’s team of Senior Vice President Lee Csenar and Executive Vice President Carlos Lopez. The property is owned by an entity that shares an address with global investment and management firm Harbor Group International, according to public records.
The building was originally constructed in 1946, with the marketing materials listing 2006 as the year of the last refurbishment. The property is currently fully leased to Wells Fargo bank until May 2025, with a final optional five-year lease extension agreed with a 10 percent rent increase. Wells Fargo has been the tenant since 1999 and has already exercised four of their optional lease extensions. The current cap rate is listed as 4.73 percent and the net operating income is just above $515,000 per year. The property also includes a parking lot for 35 cars, somewhat of a rarity in the area, according to marketing materials.
The retail asset is located alongside other retail outlets on Pico Boulevard, including the Guitar Center, LensCrafters and others. The Pico Boulevard and Westwood Boulevard intersection is a block away. The property is also across the street from One Westside Google campus, with Google having signed a 14-year lease for the 584,000 square foot building. The 240,000 square foot West End creative offices are also nearby, as well as the 201-unit residential development Overland & Ayers.
The property is also in close proximity to LA Metro’s E line on Westwood/Rancho Park and within easy reach of Century City, Beverly Hills, Culver City, Santa Monica and Westwood/UCLA.
The Registry recently reported that following the initial surge in demand for physical retail spaces post-pandemic, retailers are now contending with economic sustainability, as indicated by a recent report on the Los Angeles Retail Market Outlook Q3 2023 from NAI Capital. This transition has caused a considerable deceleration in the rate of empty retail spaces. In the third quarter of 2023, the rise in vacant retail space was only 150,000 square feet, a sharp contrast to the 1.6 million square feet recorded in the previous year. Although the total vacant area has reached a record high of 18.2 million square feet, it appears to be nearing its pinnacle, signaling a gradual return to a more typical state.
Furthermore, the retail market’s new construction hasn’t matched the expected demand, leading to a negative net absorption of 697,394 square feet over the last five quarters. Although sales volume rose by 51.3 percent in the third quarter, there was a year-over-year decrease, illustrating the ongoing adjustments and shifting investor sentiment in the market.
