Retail Leasing in the South Bay for 2026 — What Tenants & Landlords Should Be Watching

Why 2026 Signals a Turning Point for Retail Leasing in the South Bay

The retail leasing landscape across the South Bay—including Torrance, El Segundo, Manhattan Beach, Hermosa Beach and Redondo Beach—is evolving rapidly heading into 2026. Shifting consumer behaviors, digital-integration in physical stores, and tighter financing conditions are shaping how both tenants and landlords will approach new leases.

Whether you're a retailer looking for a location or an owner evaluating your property, understanding what’s ahead will be crucial to staying competitive in the region.

In this blog we cover key trends, local market dynamics, and actionable considerations for retail leasing in 2026, brought to you by RPM Real Estate Services.

1. Consumer Behavior & Retail Format Evolution

Retailers are increasingly blending online and offline experiences — the “click-to-brick” model — and that means the physical space must deliver more than just shelf space. Experiential retail, mixed-use footprints and enhanced in-store services are becoming the norm. According to industry analysis, the retail sector is moving toward fewer but higher-quality locations with strong traffic and differentiated offerings.

For leasing in the South Bay, this means landlords need to offer adaptable spaces (for pop-ups, brand experiences) and tenants need to assess whether the space supports omnichannel strategies (e.g., pick-up zones, showrooms).

2. Local Market Highlights — South Bay Submarkets

• Torrance: Established retail corridors with strong local spending power; good for destination tenants and neighborhood . (Retail Leasing Torrance)

• El Segundo: Close to major employment centers and airport access; appealing for concept retail and convenience-driven tenants. (Retail Leasing El Segundo)

• Manhattan Beach & Hermosa Beach / Redondo Beach: Lifestyle-oriented markets with high GDP per capita, tourism flows and strong pedestrian retail.

Landlords in these areas who can provide high-visibility, modern frontage and experience-driven tenant mixes will likely see stronger demand in 2026.

3. Financing & Lease Structure Dynamics in 2026

External capital markets and debt conditions continue to influence leasing decisions. According to the latest outlook research, while optimism for CRE fundamentals remains, cost of capital and access to debt are still key concerns. For retail landlords, this means structuring leases with tenant improvement (TI) allowances and flexible terms may become more common to secure strong tenants. For tenants, it means evaluating longer-term commitments, but with flexibility clauses (e.g., expansion or downsizing rights) may provide strategic advantage.

4. ESG, Technology & Experience as Differentiators

By 2026, the retail tenant and consumer expect more from a location: efficient HVAC, digital connectivity, omnichannel integration, and even sustainability elements. Retail spaces that invest in technology (e.g., data capture, smart lighting) and offer compelling experience will command higher rents. According to one trend piece: “ESG and Sustainability Take Center Stage” in CRE. For retail landlords and tenants in the South Bay, this translates into:

• Offering or selecting spaces with modern fit outs and energy efficiency

• Considering last-mile delivery or click-and-collect infrastructure

• Selecting buildings or centers that support brand activations and experiences

5. Risks & Challenges to Watch in 2026

Risk	Implication
Oversupply in submarkets	Competition may drive concessions or TI allowances
High interest rates / cost of capital	Slower leasing activity or renegotiations
Shifting consumer habits	Retailers whose models don’t adapt may vacate
Local zoning/regulation changes	Changes may affect expansion or signage rights

Players who ignore these risks may face lengthier vacancies, weaker tenant credit or declining lease rates.

6. How RPM Real Estate Services Can Help

At RPM, we work across all facets of retail leasing — from site selection to lease negotiation to tenant-landlord strategy. Whether you’re a brand seeking a storefront in Manhattan Beach or a property owner in Torrance considering the best tenant mix, we offer local expertise and actionable insight. Internal pages for reference:

• Leasing Services

• About RPM

• Commercial Real Estate Broker Los Angeles

FAQs

Q1. Should I lock in a lease now for 2026, or wait?

A: If you’ve identified a strong location with limited competition, negotiating now for a lease term beginning in early 2026 may allow better lease terms. Waiting may mean higher rents or fewer concessions.

Q2. What size retail space should I look at in the South Bay for 2026?

A: That depends on your concept. For destination brands, 2,000–5,000 sq ft may be appropriate in Manhattan / Hermosa. For neighborhood convenience or showrooms, 1,000–2,000 sq ft in Torrance may suffice.

Q3. How important is experience space for retailers in 2026?

A: Very important. As consumers increasingly value physical store visits for experience, retailers offering interactive or branded in-store events will perform better.

Q4. What is RPM’s role in lease negotiation?

A: RPM supports clients in identifying appropriate leases, benchmarking market rents, negotiating TI allowances and structuring term flexibility — all informed by our regional South Bay market expertise.

2026 offers true opportunity for retailers and landlords alike in the South Bay region. With thoughtful strategy and local insight, you can secure better leases, build stronger income streams and mitigate risk.

Contact RPM Real Estate Services today to explore the best retail leasing options for your business or property portfolio in 2026.