Despite nagging double-digit unemployment in Southern California, shopping center owners in Los Angeles and San Diego are experiencing some of the lowest retail loan delinquency rates in the nation, according to analytics firm Trepp LLC.
Of the $13 billion in securitized retail loans outstanding in the Los Angeles market, $374 million was in some stage of delinquency in September (New York-based Trepp). The local delinquency rate was 2.88% compared with the national average of 7.13%.
The San Francisco-Oakland, Calif. market has the lowest delinquency rate on securitized retail loans at 2.2%. Trepp considers a loan delinquent when it is 30 days or more past due.
Signs of improvement in the struggling commercial mortgage-backed securities (CMBS) industry have lapped onto the shores of San Diego. Of the $3.1 billion in CMBS retail loans outstanding in San Diego as of September, $147 million was in some stage of delinquency. That puts the retail loan delinquency rate at 4.69% locally, down from 4.84% in August.
The California Employment Development Department found that the Los Angeles unemployment rate stood at an unhealthy 12.6% in September, well above the national 9.6% jobless rate.
Reis reported that after nine consecutive quarters of negative net absorption, community and neighborhood shopping centers in Los Angeles posted 65,000 sq. ft. of positive absorption in the third quarter. The vacancy rate dipped from 6.2% in the second quarter to 6.1% in the third quarter.
In contrast, the retail vacancy rate in San Diego rose slightly from 7.5% in the second quarter to 7.6% in the third quarter. But that rate for the Southern California city is still much healthier than the national average vacancy rate of 10.9%, notes Reis.