Renovate Your Multifamily Retail Space to Take Advantage of Downtown Los Angeles’ Thriving Shopping Scene

It’s amazing how many times I’ve found myself in Downtown LA over the last year. If five years ago you’d told me I’d be frequenting DTLA more than twice a year, let alone twice a month, I’d have laughed. But there I was, last weekend, in the heart of downtown. What used to be a fairly undesirable location has evolved over the past few years into a destination for foodies, shoppers, and sports fans alike.

Personally, I think the growing food scene is worth the trip alone, but these days it’s not the only thing that gets me to DTLA. More and more often, I’m finding myself heading there for a spontaneous shopping spree. After all, nothing says “I love you” more than treating my family and friends to a few impulse purchases of unique items I know they’ll love.

It’s true—DTLA is becoming a retail hotbed. H&M and Zara have already set up shop in FIGat7th Shopping Centre, and Urban Outfitters is on Broadway. H&M’s sister brand, COS (Collection of Style), is planning on taking over the dilapidated Olympic Theatre on Eighth Street. And just down the road on the corner with Olive, the Commercial Exchange is undergoing major renovation work.

As a result, rental rates in the area have surged, increasing by more than 30% within the space of three years. It’s no surprise then that multifamily owners are getting in on the action. Over a third of apartment properties planning to open between 2016 and 2021 will mix residential space with another real estate asset class.

You may not have realized it until now, but your building was ahead of its time—it’s already got the retail level and the zoning to go along with it, but it’s going to need a bit of a facelift if you want to draw in some of these increasingly stylish stores and brands. How can you capitalize on DTLA’s retail revival? What’s the best way to utilize your valuable space? How can you make the space attractive to the widest range of potential retail tenants?

Tips for Retail Renovation

Renovating retail space is no small task, but it can have great rewards. Before you even begin, consider these points:

Get the Opinions of Tenants and Experts

If you already have retail tenants that you wish to keep post-renovation, approach them first to get their take on the situation:

What do they need right now from a retail space?
How would they improve your current space?
What would their dream space look like?
How does renting your space compare to their past experiences?

You may find that you can work together to create a solution that everyone is happy with—one that works for them as tenants now but can also help you attract new tenants in the future. At the same time, don’t take their word for it. Approach other businesses, from pop-up stores to global brands, to find out what they look for when leasing retail space. Once you have ideas in place, it will be important to find a renovation team to carry them out. Consultation and advice on the project shouldn’t just come from retailers; contractors with expertise in retail space and previous experience renovating multifamily apartments are likely to be able to offer invaluable insight into how to best see the project through.

Consider Who You Want to Attract

The way in which you renovate your retail space will largely depend on the type of tenants you wish to attract. After all, restaurants are far different spaces from shops. Are you looking to create amenities for your residential tenants? Or are you looking to use DTLA’s retail boom to attract cooler, edgier retail stores? Both are excellent options. Residential tenants will gladly welcome stores and restaurants that mean they don’t have to deal with city traffic to get to similar destinations elsewhere. Tenancy turnover will likely decrease as a result and you could justify rent increases in the future. At the same time, more fashionable, higher-end stores may be willing and able to pay higher retail rents in the short term and contribute to establishing your apartment’s area as a retail destination. If this happens, you can look forward to increased demand for residential space and the ability to demand much higher rents as a result.

Don’t be Afraid to Think Smaller

Over the last few years, shopping destinations around the country have seen a boom in pop-up retailers. A perceptive property owner might seek to take advantage of this trend. By creating several smaller retail units, rather than one or two large ones, you can appeal to smaller or growing retailers who simply can’t fill bigger venues. While this means more units to fill, it should also mean a bigger rent yield overall. Focusing on pop-up stores also has the added benefits of supporting local businesses and of revitalizing your shopping scene on a regular basis, giving everyone a reason to come back.

Design and Decoration

It’s important not to go overboard when it comes to designing and decorating your newly renovated retail space. No one is going to want to lease a space that can’t be tailored to their own unique brand. With this in mind, it’s important to keep the shape and space flexible so that shops from every part of the consumer retail spectrum can call it home. This also means keeping colors simple and making it possible for retailers to decorate the space how they see fit—without creating permanent design changes, of course.

Making Your Multifamily a Multipurpose Destination

Now, more than ever, multifamily apartment owners have the opportunity to turn their existing spaces into appealing and popular retail destinations. Attracting new, successful retailers to your building can diversify revenue streams, build a greater sense of community in the area, and attract trend-conscious millennials. By carrying out renovations with an experienced multifamily construction team, you can position your property at the heart of DTLA’s booming scene.