At a time when a long-term retail development shortage has driven up demand for high street, high-income store locations, Los Angeles and surrounding communities have at the same time been beset by changes in federal policy around immigration enforcement and small business loans. That has damaged foot traffic and sapped the pulse of many immigrant communities and commercial districts.\u00a0<\/p>\n
One in three workers in the state is an immigrant, according to the U.S. Census Bureau<\/a>, and a recent report from UCLA, titled The Cost of Fear, discovered the impact of new federal actions on the region\u2019s sizable Latino business sector was significant. Los Angeles County boasts 4.76 million Latinos, half the county\u2019s total population, who collectively own 374,000 businesses across different industries, or a quarter of all firms.\u00a0<\/p>\n The June 2025 immigration enforcement surge that became a national news story caused an estimated $3.16 million in losses across nine main enforcement areas, with nearly 60 percent of businesses reporting that sales dropped by half (that\u2019s excluding informal businesses like street vendors). UCLA researchers estimate that Latino businesses countywide lost $52 million in revenue within two weeks of the surge.<\/p>\n Many businesses haven\u2019t fully recovered. \u201cA year later,\u201d the report reads, \u201cthe crisis is not over. Many of these businesses remain in debt, barely breaking even, and struggling to stay open.\u201d<\/p>\n That\u2019s in sharp contrast to other corners of L.A.\u2019s real estate world. One striking statistic underscoring the split impacting Los Angeles retail is investment sales volume, which shot up 40 percent in the second quarter of the year, according to the most recent sector analysis from real estate services firm Matthews<\/a>. That marks a massive yearly jump.\u00a0<\/p>\n Analysts found a significant portion of that capital was focused on grocery-anchored centers and high-quality assets on the outskirts of the metro region. In Torrance, a modest grocery-anchored center sold in December for $108 million<\/a>, setting a record for such sales in L.A. County\u2019s South Bay. JLL<\/a> found that occupancy in L.A. grocery-anchored centers hit 95 percent<\/a> in the spring.<\/p>\n Part of that growth comes from a shift in the broader investment market, according to Sandy Sigal, chairman and CEO at owner NewMark Merrill Companies<\/a>. As office opportunities remain sidelined, investors targeted retail, which emerged from the pandemic with a proven track record and a lack of excess inventory.\u00a0<\/p>\n As Sigal puts it, the thesis has changed.\u00a0<\/p>\n Part of that flood of new investment has been aimed at a perennial winner: grocery-anchored retail. In addition, there\u2019s a small pipeline of new product overall \u2014 just 600,000 square feet of retail space is in the works in the city of Los Angeles, or 0.1 percent of existing retail space \u2014 while at the same time the region is seeing strong demand from value-focused retailers. T.J. Maxx and others are riding high, capturing more budget-minded shoppers amid persistent inflation and sour consumer sentiment. Overall retail vacancy might have inched up this quarter, per Matthews data, but citywide it\u2019s still sitting at just 5.83 percent.<\/p>\n Grocery-anchored retail remains a sure bet amid significant investment, but the growth in recent years doesn\u2019t compare to high-end shopping districts. Brands have been battling over premier locations like Rodeo Drive in Beverly Hills, where there\u2019s fewer and fewer chances to lease the types of sought-after space that attracts affluent shoppers, said Newmark<\/a> Executive Vice Chairman Jay Luchs. Rents on Rodeo Drive have soared 50 percent since 2019, per CBRE<\/a>, with one property commanding nearly $1,400 a square foot.\u00a0<\/p>\n It\u2019s pushing elite brands to buy and renovate their own stores in a still-growing portion of Rodeo Drive and Beverly Hills\u2019 Golden Triangle.<\/p>\n \u201cWe\u2019re kind of entering a new phase where almost everything\u2019s fully leased, and, if there\u2019s a vacancy, it\u2019s going to get leased,\u201d said Luchs. \u201cI joke that we have leased ourselves out of a job in L.A. It is a very tight market.\u201d<\/p>\n There\u2019s also rising demand for key commercial corridors, such as San Vicente, South Beverly Drive, Larchmont, Riviera Village in Redondo Beach, and Manhattan Beach Boulevard, said Michael Pakravan, senior vice president and director of retail leasing at Matthews. The boom in the South Bay \u2014 with aerospace, defense and advanced manufacturing<\/a> startups creating a critical mass of young, high-paid engineers and other employees \u2014 is also fueling retail demand. Pakravan calls it the Hermosa Beach Big Bang Theory.<\/p>\n Pakravan recently helped sign a retail lease for Chamberlain Coffee, a nearly $25 per square foot per month deal for prime space on Abbot Kinney, a Venice Beach shopping mecca filled with startup brands and high-end fashion. While there\u2019s significant turnover on that street, brands see the activity \u2014 consumers snapping selfies and downing $21 Erewhon smoothies \u2014 and branding opportunities keep coming and driving up rents, which average $2.76 per square foot per month<\/a>.\u00a0<\/p>\n There\u2019s a night-and-day difference between these corridors in different cities and neighborhoods versus Downtown L.A. and strip mall sites. CBRE research found<\/a> that neighborhood and strip retail had the highest vacancy figures, 7.6 percent, of any retail type in Los Angeles last quarter, and recorded 83,000 square feet of negative absorption, bucking the larger market trend.<\/p>\n \u201cWe have fully built-out restaurants in Downtown L.A. that are turnkey, ready to go, with owners who would even do incentive deals, and it\u2019s very difficult to lease,\u201d Pakravan said. \u201cCompare that with San Vicente, where you\u2019re seeing $10-a-foot-a-month rents on side streets.\u201d\u00a0<\/p>\n The real divide, however, is big business and chains versus the entrepreneur. A recent report from Maher Commercial Realty<\/a> spells it out: Traditional merchandise tenants in average locations with outdated build-outs and no foot traffic are the ones having trouble.<\/p>\n Small owners are getting clobbered by rising costs and rent, Sigal said, expenses that only the big guys can absorb. He predicts more tenants gravitating toward successful neighborhood centers, bringing their foot traffic with them, and creating a haves-versus-have-nots situation where more activity and revenue gets concentrated in successful shopping plazas, and small strip centers lose out.<\/p>\n \u201cIf you\u2019re a small chain that wants to expand, if you\u2019re a small restaurant chain, you\u2019re not expanding to California,\u201d said Sigal.<\/p>\n![\"Customers](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/09\/Erewhon-Culver-City-GettyImages-2177498336-WEB.jpg\" "\\"In")
Customers sit outside an Erewhon in Culver City in Los Angeles. PHOTO: Dania Maxwell\/Los Angeles Times via Getty Images<\/p>\n