Thursday, September 3, 2026

Retail Vacancy Eases Across L.A. Metro, Marcus & Millichap Reports, as Pasadena’s Tri-Cities Submarket Posts the Region’s Lowest Rate

Competing brokerage reports measure vacancy differently, from 5.6 to 7.3 percent, but agree new retail construction has nearly stopped and investment sales are up sharply

Retail vacancy across the Los Angeles metropolitan area, the market that includes Pasadena and the San Gabriel Valley, fell to 7.3 percent among multi-tenant properties in June as retailers moved into recently vacated big-box spaces and builders delivered the smallest first-half addition of new space in at least 19 years, according to a third-quarter report published Wednesday, Sept. 2, by commercial brokerage Marcus & Millichap.

The Tri-Cities submarket of Pasadena, Glendale and Burbank posted the lowest retail vacancy in the region, 4.6 percent, in the second quarter, according to a separate report by brokerage Matthews Real Estate Investment Services.

Multi-tenant vacancy declined 50 basis points, or half a percentage point, from a year earlier, Marcus & Millichap said. More than 600 lease commitments were signed at neighborhood and strip centers during the first half of 2026.

Retail inventory expanded by only 162,000 square feet in the first six months of the year, the lowest first-half total since at least 2007, the report said. Downtown Los Angeles, the Westside cities and the San Fernando Valley recorded no new supply.

“Los Angeles retail fundamentals are showing signs of improvement as limited new supply and active leasing help bring supply and demand into better balance,” said Tony Solomon, senior managing director and market leader for the firm, in a statement. “Shopping center vacancy has declined, and improving office and apartment occupancy could provide additional support for retail demand across urban corridors.”

Other brokerages put the region’s overall retail vacancy lower because they count all retail space rather than only multi-tenant centers. Kidder Mathews reported 5.6 percent vacancy in the second quarter, up 10 basis points from a year earlier and essentially flat from the prior quarter, based on CoStar data. Matthews reported 5.83 percent, which it called the highest level in more than a decade after three consecutive years of negative net absorption, though it said the pace of store closures has begun to slow as grocery, discount and fitness operators backfill vacant space.

All three firms describe a development pipeline that has nearly stopped. Matthews said projects under construction equal about 0.1 percent of existing inventory, with most activity focused on redevelopment. Kidder Mathews listed the 82,390-square-foot Rowland Town Center in the eastern San Gabriel Valley, scheduled to deliver in the third quarter of 2026, among the region’s few notable projects.

Rents remain under pressure, according to Marcus & Millichap. The firm forecasts the average asking rent will reach $32.35 per square foot per year by year-end, down 1.5 percent from a year earlier, and said shopping-center asking rents have declined by $3 per square foot over the past six quarters. Kidder Mathews put the second-quarter average at $2.76 per square foot per month, which works out to about $33 a year.

Investment activity is picking up. Marcus & Millichap said sales increased 18 percent year over year during the 12 months ended in June, and second-quarter transaction volume reached its highest level since summer 2022. Matthews reported retail sales volume of $4.9 billion over the trailing 12 months, up more than 40 percent, driven by demand for grocery-anchored centers.

“Investors are responding to improving market conditions, with transaction activity reaching its strongest quarterly level in several years,” Solomon said. He added that the migration of film and television production to competing markets “has created challenges for retailers in some entertainment-oriented districts,” and that investors are focusing on submarkets with strong residential density, neighborhood-serving retail demand and diverse employers.

The metro added 18,500 jobs during the first half of 2026 after losing 5,000 positions during the prior six months, with health services leading the gains, followed by hospitality and food services, according to the Marcus & Millichap report. Matthews pointed to the 2028 Olympic Games, the FIFA World Cup and continued rebuilding after the 2025 wildfires as expected sources of economic stimulus for the region.

The Marcus & Millichap report is available at https://www.google.com/url?q=https://www.marcusmillichap.com/research/market-report/los-angeles/los-angeles-3q26-retail-market-report&source=gmail&ust=1788519021717000&sa=E.