By Natalie Dolce | September 2025 | As published by REBusinessOnline.com
California’s retail market is a bit of an enigma nowadays. That’s because it’s both resurgent and restrained, as Jimmy Slusher, senior vice president of CBRE’s National Retail Partners-West team, notes.
“Retail in California remains resilient despite a more complex economic and political backdrop,” he explains.
“While interest rates remain elevated, debt capital for retail has increased, with strong lender demand and relatively tight spreads supporting transaction velocity and pricing. Higher construction and labor costs have limited new retail development, creating a favorable backdrop for existing retail assets. Consumer spending has held up, with sustained demand for certain categories and concepts.”
This push-pull dynamic is the result of several years of volatility. Pandemic-era uncertainty gave way to record transaction volumes in 2022, with CBRE noting more than 100 statewide retail transactions that averaged $53 million that year. This was followed by an investment slowdown as interest rates climbed.
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Capital Flows, but with Caveats
As Slusher alludes to, investors are attracted to certain elements of this market. Higher-value assets, for example, are trading at a volume not seen in years.
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Investment activity is picking up across Southland regions as well. Chris Premac, vice president of retail brokerage at Coreland Companies, points to two record-setting July transactions in Orange County as evidence of the strong investor appetite in today’s market. This includes Regency Centers’ purchase of a five property Rancho Mission Viejo shopping center portfolio for $357 million, as well as Space Investment Partners’ acquisition of the grocery-anchored Fullerton Metrocenter in Fullerton for $118.5 million.
“Retail shopping centers in Southern California remain a highly sought-after product,” Premac says. “There has been an uptick in investment sales with several record-setting transactions, including these nine-figure deals that prove the strength of anchored retail centers in Orange County.”
This strength extends beyond county lines, with Premac noting that the average vacancy rate for Southern California shopping centers is about 4.1 percent, compared to the national average of 4.9 percent. While vacancy is low, some of this empty space is due to sizeable closures.
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“In each case, there is the opportunity to improve activity with a new, more relevant retailer,” Schnitzer says.
Active owners are doing just that. Coreland recently executed two Sky Zone Trampoline Park leases in North Orange County, backfilling more than 60,000 square feet of former grocery space, while NewMark Merrill has inked deals with Burlington, Ross, Marshalls and Sprouts.
Categories Carrying the Market
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