It may be true that modern man frantically seeks to earn enough to buy things he's too busy to enjoy, but at some shopping meccas in Los Angeles--set off with klieg lights and red-velvet ropes in a fin de siecle Pacific sensuality--you can at least think you look good while doing so.  California poses the epitome of American style, for good or ill, which now reaches all the way up to its recently elected governor. However, there is nothing celluloid-pomp about the results of Gov. Schwarzenegger's work to date.  Fresh from passage of the $15 billion bond to stay the state fiscal crisis, he has bound on to revamp workers' compensation laws, which had been cited as a significant onus to being able to attract as well as retain businesses statewide, including Los Angeles.  Good news considering that while the City of Angeles' shop-front window may be in great shape, there seems to be some disarray in the storeroom and management office, and this business-challenged scenario seems borne out by recent employment statistics.  According to the Department of Labor, Bureau of Labor Statistics, the Los Angeles-Long Beach PMSA non-farm labor force lost 3,600 jobs in February 2004 (not seasonally adjusted), as compared to BLS figures a year ago, constituting a 0.1% drop in this 4.0 million workforce.  While most sectors lost employees, Retail Trade gained 3,300 jobs; also, the related Leisure & Hospitality sector saw a strident workforce gain in February 2004 of 18,000 workers, up 5.1% compared to this time last year.  Meanwhile, the seasonally unadjusted unemployment rate fell 50 basis points to 6.3% from a year ago, according to BLS.  Los Angeles' population has been growing in tandem with both regional and national annual averages of around 1.0%.  According to Economy.com, the average Los Angeles household income was $97,720 in the first quarter, just under both the regional and national top-metro averages.

Nevertheless, despite the city's struggle with ongoing job losses,  with the continuation of favorable supply-demand fundamentals that have characterized this market--a strong and sustained in-migration, well established shopping zones, a thriving tourist trade and a core of wealthy consumers--Los Angeles' neighborhood and community center retail sector has concluded the first quarter of 2004 in good trim. According to Reis, the sole first quarter delivery for this market was the March completion of the 270,000-square-foot West Hollywood Gateway shopping center, a J.H. Snyder Co. development, located at Santa Monica Boulevard and La Brea Avenue.  That level of new product was easily outstripped by strong first-quarter demand, reflected by a total 392,000 square feet of net absorption.  With leasing activity up, the shopping center vacancy rate for the overall market fell to 3.9%--down 20-basis-point from year-end 2003--its lowest vacancy since 2000, placing this market seventh among Reis's top 59 shopping center markets based on first quarter vacancy.  Moreover, the increase in shopping center occupancy was not paid for through rent concessions; rather, asking rents increased to $23.54 psf, a one-quarter gain of 1.3% that placed Los Angeles fifth among Reis's top retail metros; effective rents followed suit, gaining 1.4% in value to $21.77 psf.   Contributing to Los Angeles' retail success is Rodeo Drive, arguably the most prestigious retail market in the world, which is located in the Santa Monica/Westside/Downtown submarket.  This submarket has 1.8 million square feet of shopping center anchor space and over 2.7 million square feet of non-anchor space. First quarter vacancy and average asking rent in anchor space here were 3.5% and $25.98 psf, respectively; non-anchor vacancy and average asking rent were reported respectively at 6.7% and $33.47 psf.

And as if Los Angeleans didn't have enough retail outlets to choose from, last August, one of the city's most ambitious, if controversial, public-works projects in its 15-year history got underway in West Hollywood.  On San Vicente Boulevard, the groundbreaking ceremony for the Santa Monica Boulevard Reconstruction Project took place.  The 18-to-24-month undertaking will cost the city $32 million, and is expected to convert the heavily traveled 3-mile stretch of Santa Monica Boulevard from La Brea Avenue to Doheny Drive into a world-class urban Main Street, complete with additional retail offerings.  Meanwhile, local residents have voiced their opposition to Wal-Mart's recent attempt to move into the Inglewood area, resoundingly defeating the discount retailer's efforts, according to the Los Angeles Times.  Undeterred, Wal-Mart plans to build 40 supercenters in California. 

As every ilk of retailer tries to gain a foothold in this metro, will LA's style hold up?  To investigate this question as well as how long Los Angeles' shopping center scene can sustain its tight vacancy and solid rent growth, check out the latest Reis Observer.