Limited supply, lots of upside potential and more certainty compared to other asset types are all driving investors to retail properties.

In the first quarter of this year, $4.8 billion worth of retail sold in the county, compared with $4.2 billion the previous quarter, according to data from CoStar Group Inc.

“Retail overall is very hot. We’ve got a lot of steam coming out of year-end and into 2026,” said Bryan Ley, a managing director at Northmarq, adding that retail sales were up 54% last year and that same momentum has pushed into this year.

Daniel Tyner, a managing director at Jones Lang LaSalle Inc. specializing in retail, called demand “at an all-time high.”

“We’ve seen increased offer counts, increased investors coming back into the retail space and new entrants…specifically in dense areas like L.A., it’s really hard to find good opportunities, so when there are opportunities that come to market, we are getting flooded with interest,” Tyner said.

A lack of new inventory in L.A. over the last few years has made retail real estate a more secure investment than other asset types, Tyner said. Furthermore, occupancy for grocery-anchored assets is above 95%, making it “a very stable asset class.”

It is also not faced with rent control and other restrictions that some other asset classes have to contend with, he said.

Calabasas-based NewMark Merrill Cos. Chief Executive Sandy Sigal echoed that sentiment, adding that a lack of development has made for a lot of competition and “has made existing development a little more valuable.”

The company is currently looking to buy properties.

“Periods of distraction, uncertainty, periods when the mirror is a little foggy are good times for us,” Sigal said. “We are long-term owners and try not to let moments in time overly impact our investment strategy.”

NewMark Merrill is planning to buy at least six assets and build at least six this year. Sigal, a native Angeleno, said he’s interested in L.A. County but not the city for those assets.

“L.A. city for us is an absolute no go,” he said. “It has nothing to do with the population of L.A. city, I love L.A. city, but the politics and the process, I’m in three states and 100 different communities and there’s not one that’s less user-friendly than L.A. city.”

New investors show interest

On top of the lack of supply, new or returning investors in the product type are also making the market more competitive, owners and experts said.

“Some other product types have more pressures on them right now,” Ley said. “We’re seeing some of those folks who traditionally were in other asset classes come to retail.”

Yields for retail products were higher than other asset types and had more stability, Ley said. Indeed, the top retail sale of the quarter was not made by a traditional retail investor. In a $270 million deal, Beverly Grove-based Cedars-Sinai Medical Center purchased the Beverly Connection shopping center near its campus.

Other top deals of the quarter included the Long Beach Exchange, which Edens purchased for nearly $135 million and The Quad at Whittier, which TRC Retail sold for $100 million.

Ley said he is seeing interest for retail assets ramp up among high-net-worth individuals and family trusts.

Tyner is also seeing more institutional capital come back to retail.

“A few years ago, retail was not a main focus for a lot of institutional groups. Today, that has completely changed,” he said. “They are allocating more capital to deploy in retail than in prior years.”

In 2023, the buyer pool for grocery-anchored centers was about 85% private and 15% institutional. Today, it’s roughly split down the middle, Tyner said.

For Sigal, this has led to more competition when looking to buy assets.

“When we went into Covid, the narrative already was retail is going to be dying,” said Sigal, who has been in real estate for nearly 40 years. “But coming out of Covid, retail only got stronger and retail investment is the highest it’s ever been since I’ve been in the business.”

Sometimes, this leads to his company being outbid on potential acquisitions. Still, Sigal said the company has picked up a number of assets recently and is looking to do more deals this year.

What investors are looking for

While Cedars has not announced long-term plans for the Beverly Connection, experts said it is a unique case when it comes to retail centers. Generally speaking, they are seeing a lot of interest in grocery-anchored centers, power centers and properties with drive-thru.

JLL’s Tyner said most investors are focused on “neighborhood grocery anchored retail, and in addition, we are seeing more capital look at larger big box power centers.”

Drive-thrus, he added, are quite valuable because they are incredibly difficult to get approved.

“Those are extremely attractive,” Tyner said. “Most tenants today would prefer to have a drive-thru to an inline space.”

Ley said drive-thrus with turnover potential are incredibly attractive.

NewMark Merrill is interested in centers that serve the community and has invested recently in areas like Carson, Inglewood and Norwalk, Sigal said.

“We build and buy for working-class families,” he said, adding that he wants “to buy centers and build centers that are big enough to make a difference to the community.”

These centers can range between 100,000 and 500,000 square feet, but he has bought smaller assets to “get a foothold in the community” in areas he is entering.

Westwood-based Stockdale Capital Partners, which has 2.5 million square feet of retail in the greater L.A. area, is focused on areas with “dislocation in the market,” said Bastian Peters, managing director at the company and co-head of the firm’s retail platform.

“All of the properties we are interested in have a common feature: that’s location and the market,” Peters said. To buy a property, Stockdale wants to be able to “effect change” at the asset through rebranding, remerchandizing and reimagining.

For example, the company purchased The Oaks, a large shopping center in Thousand Oaks, in late 2024.

“There’s an opportunity to densify the site, to reinvigorate the retail asset by replacing some of the anchor, department store boxes and remarchandise the property…and also by just improving the common areas,” Peters said.

At other properties owned by Stockdale, former department stores have become things like gyms and one will be a Wayfair.

The approach is in line with what Ley is seeing in the market.

“Most investors today are looking for either property with value add or upside potential or rents that are stable with upside potential for the future,” Ley said.

Buyers are not just buying assets with high rents and hoping things go according to plan, but rather looking to make changes to increase value, he said. “Everybody is looking for a solid today yield with the ability to push further.”

He said that anchor leases haven’t seen huge changes, but other parcels have seen rent growth and are “where more owners see the potential to push those rents.”

Bright future expected for asset class

Experts and owners expect strong sales for retail assets this year.

Strip and grocery anchored centers “will continue being the darling of retail transactions,” Ley said.

The effects of Measure ULA – a transfer tax on properties that sell for more than $5.3 million – are now better understood and worked into sale prices, he said. “We’re going to see significant strides again in retail transactions across the U.S. as well as Los Angeles.”

Stockdale was “actively investing in several markets, among them the larger L.A. area,” Peters said. 

“We want to grow our retail platform over the next two years,” he added. “We are highly committed to the retail sector and firm believers that retail will continue to be stronger…there’s very limited new construction in the retail sector, which will benefit retail for years to come.”

Tyner expects increases in both single-asset transactions and portfolio sales, both locally and nationally.

“There’s a lot of capital that needs to be deployed,” he said.