Downey's Market Study Projects Demand for 858,649 Square Feet of New Retail and 2,950 New Housing Units Through 2045

The City of Downey released a land use market demand study that will help shape the city's first comprehensive General Plan update in more than 20 years. The study was prepared for the City by The Natelson Dale Group, Inc. (TNDG) of Yorba Linda and is dated October 24, 2025. It was published as Attachment A to the Downey Planning Commission's August 5, 2026 agenda, alongside a status report on the Comprehensive General Plan Update prepared by Senior Planner Abraham Luna and submitted by Community Development Director Irma Huitron.

The study forecasts demand for retail, office, industrial, housing, and hotel development in Downey through 2045. The retail, office, and industrial forecasts run from a 2023 base year; the housing and hotel forecasts run from 2025. Its central finding: with population growth in Downey projected to be nearly flat, almost all of the city's near-term retail development capacity comes from recapturing sales that residents currently spend elsewhere — not from new residents.

The Growth Assumption Behind Every Number

The forecasts rest on demographic projections from the Southern California Association of Governments (SCAG), drawn from Connect SoCal 2024. Those projections show almost no growth in Downey. The city's population is estimated at 111,173 in 2023 and projected at 111,680 in 2045 — an increase of about 500 people over 22 years. Employment is projected to rise from 47,451 to 48,612, a growth rate of 2.4%, below the 2.7% projected for the Mid-Cities submarket and well below Los Angeles County's 6.1%.

For households, the gap between the SCAG forecast and City policy is wider still. TNDG reports that SCAG projects Downey will add only 600 new households between 2019 and 2050, a growth rate of about 1.7%. Downey's Regional Housing Needs Assessment allocation, reflected in the 2021-2029 Housing Element adopted October 11, 2022, identified 6,525 needed units over an eight-year cycle.

TNDG concluded the SCAG household forecasts "appear overly conservative" and built its housing model on a more aggressive scenario. The retail, office, and industrial chapters give no equivalent adjustment; the population and employment tables underlying each of them (Tables III-2, IV-4, and V-4) all cite SCAG among their sources. The study states plainly that if the General Plan update and Housing Element implementation significantly expand development capacity, "future demand could exceed the numbers presented in this preliminary report."

Retail: The Leakage Story

Retail is the largest opportunity the study identifies, and it is almost entirely a recapture story rather than a growth story.

TNDG defines a Primary Market Area (PMA) coextensive with the City of Downey and a Secondary Market Area (SMA) covering a five-mile radius around it, including portions of Bell, Bell Gardens, Bellflower, Commerce, Cudahy, Lynwood, Maywood, Montebello, Norwalk, Paramount, Pico Rivera, Santa Fe Springs, and South Gate. Combined trade area population is 728,202 in 2023, rising to 737,534 by 2045.

Comparing potential demand against actual taxable sales reported by the California Department of Tax and Fee Administration, the study estimates Downey captured $1.89 billion of $2.27 billion in potential 2023 retail demand — 83.2%. The unrecaptured balance is what the study calls leakage.

TNDG puts the recapturable sales at roughly $408 million in 2023, rising to about $424 million by 2045. That figure is larger than the $382 million difference between total demand and total sales because the recapture table zeroes out the gasoline station surplus rather than subtracting it. The general merchandise surplus is still subtracted, absorbed into the GAFO shopper-goods subtotal.

The category detail is where the leakage becomes actionable. Actual sales as a percentage of expected demand, 2023:

Downey is a net importer of general merchandise and gasoline sales and a net exporter in every other category. The study attributes some of the outflow to research prepared for the City showing that some residents do some of their shopping in nearby Cerritos and Long Beach, which the study says offer a wider array of facilities.

Converting the recapturable sales into building space, the study projects demand for 828,262 square feet of new retail space in 2023 growing to 858,649 square feet by 2045. Of the 2045 total, 500,172 square feet is in the GAFO group (general merchandise, apparel, furniture and appliances, and specialty), 67,507 square feet in food and beverage, 49,748 square feet in food service and drinking, 81,731 square feet in building materials and garden supplies, 30,694 square feet in auto parts, and 128,797 square feet in service space such as dry cleaners, salons, and banks.

Two important qualifications sit inside the retail analysis. First, TNDG treats the PMA as a "relatively closed system" and describes its capture rates as "theoretical maximums" achievable only if Downey's retail inventory expanded enough to meet all resident shopping needs locally. Second, the demand factors are built on point-of-sale taxable data and cover brick-and-mortar purchases only — the share of household income spent online is excluded from the demand estimate entirely.

The sales-per-square-foot conversion factors — $450 for GAFO, $500 for food and beverage and for food service, $525 for building materials, $300 for auto parts — are described by TNDG as "generally at the high end of the range," which produces lower square footage estimates than mid-range factors would.

A Numbers Discrepancy Worth Knowing About

The retail section of the study contains two different totals for the same forecast. Table III-1, the summary table at the front of the retail chapter, reports 793,313 square feet of supportable new retail space in 2023 growing to 823,453 square feet by 2045, and the narrative beneath it describes "about 793,000 square feet" and "about 823,000 square feet." Table III-14, the detailed calculation at the end of the chapter, reports 828,262 square feet in 2023 growing to 858,649 by 2045.

The executive summary and Table II-1 use the higher figure, 858,649. Working the arithmetic from Table III-12 and the sales-per-square-foot standards in Table III-13 also produces the Table III-14 numbers. The gap between the two tables is roughly 35,000 square feet. Anyone citing the study should specify which table they are drawing from.

A second, smaller inconsistency: Table III-14 is labeled "Services Space at 10% of Total," but the narrative states services space is assumed at 15%, the figures in both tables compute to 15%, and the corresponding appendix table is labeled 15%.

A third: the "Expected Less Actual" column in Table III-11 sums to $381,565 thousand, and total demand less total sales is $381,566 thousand, but the table's total row prints $242,368 thousand.

Office: Very Tight, Very Small

Downey's office market is one of the tightest in Los Angeles County. CoStar data as of Q4 2024 shows 2,085,378 square feet of office inventory in the city with 41,131 square feet vacant — a 2.0% vacancy rate. The surrounding Mid-Cities submarket sits at 3.9%, which the study describes as lower than the other major Los Angeles County submarkets, against a countywide rate of 16.3% across 444.4 million square feet.

Downey accounts for 17.4% of the Mid-Cities office inventory. About 24% of the city's 47,451 jobs are estimated to be housed in office space, above the 21% Mid-Cities figure and below the county's 29%.

TNDG projects Mid-Cities demand for 358,218 to 597,030 square feet of new office space through 2045, using employee density factors of 150 and 250 square feet per job. Taking the midpoint of 477,624 square feet and applying a Downey capture rate of 10% (baseline) to 14% (aggressive), the study projects 48,000 to 67,000 square feet of new office space in Downey over 22 years.

The study notes the projected Mid-Cities pace of roughly 21,700 square feet per year is below the 47,800 square feet per year averaged over 2014-Q4 to 2024-Q4, and that CoStar's 10-year forecasts show negative net absorption for office space in the submarket. Growth in work-from-home arrangements is cited as a source of uncertainty for long-term office projections.

Industrial: Larger Market, Similar Constraint

Downey's industrial base is about 2.3 times the size of its office base — 4,888,648 square feet with 196,351 square feet vacant, a 4.0% vacancy rate. The Mid-Cities industrial submarket totals 115.1 million square feet at 5.7% vacancy; Los Angeles County totals 962.8 million square feet at 5.8%.

Downey sits within the Downey/Paramount industrial area, which holds 21.6 million square feet. Downey's 4.88 million square feet represents about 4.2% of the Mid-Cities submarket overall. (A footnote to Table V-1 in the study describes that 4.2% as Downey's share of the Downey/Paramount area, which does not reconcile — 4.88 million of 21.6 million is roughly 23%.) About 11.3% of Downey jobs are estimated to be housed in industrial space, below the 16.5% county and 21.3% Mid-Cities figures.

Using density factors of 1,100 and 1,500 square feet per job, TNDG projects Mid-Cities demand for 1.93 million to 2.63 million square feet through 2045. Applying a Downey capture rate of 6% to 8% to the 2,283,625-square-foot midpoint yields 137,000 to 183,000 square feet for the city.

Here too the forecast runs below history: about 104,000 square feet per year for Mid-Cities against a 24-year average net absorption of roughly 190,400 square feet per year from 2001-Q4 to 2024-Q4. TNDG attributes the slowdown to decreasing land availability, and points to CoStar's 10-year projections showing limited net absorption through 2034.

Note that the narrative text accompanying Table V-6 repeatedly says "office space" where it means industrial space — a drafting error in the source document. The figures themselves are the industrial ones. Table V-6 also lists Downey's existing industrial inventory as 4,882,648 square feet, against 4,888,648 in Table II-2.

Housing: 2,950 Units, None of Them Detached

Downey has 36,589 housing units and a 3.1% vacancy rate, below Los Angeles County's 4.8% and California's 6.39%, per California Department of Finance E-5 data for 2025. Average household size is 3.13 persons, against 2.72 countywide. About 62% of the housing stock is in single-unit configuration and 37% is in structures with five or more units.

The stock is old. Among Downey's occupied units — 33,472 per the 2023 American Community Survey, a different count from the 35,469 occupied units DOF reports — roughly 50.8% were built in the 1950s or earlier, compared with 42.5% for Los Angeles County. Among owner-occupied units the figure is 65.3%.

Recent construction has been almost entirely low-density. Census Building Permits Survey data show 960 units permitted in Downey from 2015 through 2024, of which 907 were single-unit, 47 were in 2-to-4-unit structures, and 6 were in structures of five or more units. Single-family permitting has accelerated since 2021, averaging about 143 units a year against a 10-year average of about 91.

The planning pipeline points the other direction. TNDG counted 547 units in various stages of entitlement as of 2025, drawn from the City's Community Development Department Updates for August and September 2025. Of those, 327 units (60%) are multi-family and 220 are single-family. Individual projects include a 116-unit apartment project at 10361 Foster Road with 18 units dedicated as affordable, a 145-unit townhome development proposed at the former Honda Service Center at 11136 Dollison Avenue, a 100-unit multi-family project at 11269 Garfield Avenue with a funding application at HCD and a tax credit application pending, and a 61-unit development proposed at 12850 Woodruff Avenue on a vacant lot between Calvary Chapel and the I-105 freeway.

TNDG describes future detached single-family development as "greatly constrained due to lack of available land," and the model holds detached single-family, 2-to-4-unit structures, and mobile homes constant — citing that constraint together with the composition of the planning pipeline and an assumption that higher-density product will drive the increase in homebuilding activity. Table II-1 in the executive summary labels the 780 units as "Single-family Residential," which the detail table clarifies as attached product only. Developers reading the summary table alone would draw the wrong conclusion about detached product.

Hotel: One Building's Worth of Demand, Late in the Period

Downey has 735 hotel rooms across 14 properties, ranging from 10 rooms to the 220-room Embassy Suites by Hilton built in 1985. The study reports that no new hotels were built in the city in the 37-year period between 1988 and 2021, and that the 140-room SpringHill Suites completed in 2022 is the only hotel developed in Downey in recent decades. (The executive summary describes that span as "the past 37 years" and the hotel chapter as "the past 39 years.") Ten of the 14 properties are classified economy, and ten were built before 1965.

The Los Angeles Southeast hospitality submarket contains 8,498 rooms and added an average of 78 rooms a year between 1987 and 2024. Extrapolating that rate produces 1,560 additional rooms by 2045. Downey holds about 8.6% of the submarket inventory; TNDG applies a capture rate of 7% (baseline) to 11% (aggressive), yielding 109 to 172 rooms — approximately one modern hotel.

The study says that demand would likely come later in the period, 2035 or after. Four hotels totaling 444 rooms are already planned or proposed elsewhere in the submarket — two in Rosemead, one in Commerce, and one in Santa Fe Springs — and TNDG expects those to absorb most near-term demand.

Where the Market Study Fits in the General Plan Update

Downey adopted its current General Plan in January 2005 with a horizon year of 2025. The City began a three-stage update in 2020.

Stage 1 was the Housing Element update, adopted in October 2022 and subsequently certified by the California Department of Housing and Community Development. Stage 2, completed in January 2025, implemented key Housing Element programs including two Housing Overlay Zones and Objective Design Standards. Stage 3 is the current comprehensive update, covering the remaining mandatory and optional elements — Land Use, Circulation, Conservation, Open Space, Noise, Safety, Economic Development, and Design and Cultural Resources — plus a new Environmental Justice Element required under SB 1000.

The City is working with consultant MIG. Sub-consultant Architectural Resources Group is preparing Historic Context Statements and Architectural Style Guides. The update is organized in five phases, and the City reports it is currently in Phase 4, General Plan Development.

Phase 1, completed in fall 2024, included a parcel-level review of more than 1,500 parcels to identify inconsistencies between existing zoning and General Plan land use designations. The staff report states that resolving those inconsistencies through the update and its associated environmental review "will streamline future development review for property owners."

Residents at pop-up events favored moderate-density mixed-use development along Firestone Boulevard, Bellflower Boulevard, and near Downey Landing and the Promenade, while preserving lower-density character near existing single-family neighborhoods. The staff report also records "strong support for community gathering spaces, small local businesses, and higher-paying jobs over traditional retail expansion" — even though retail recapture is by a wide margin the largest development opportunity the market study identifies.

The Draft General Plan elements and the Draft Programmatic Environmental Impact Report were released July 7, 2026, opening a 45-day public comment period that closes August 20, 2026 at 5:00 p.m. A Notice of Preparation ran in the Downey Patriot on March 11, 2026, and a scoping meeting was held April 2, 2026, with more than 40 notices mailed to responsible and interested agencies. The staff report lists the California Air Resources Board, Metro, Downey Unified School District, the South Coast Air Quality Board, Edison, Los Angeles County Sanitation, and neighboring cities. On April 22, 2026, City staff hosted a meeting for property owners whose parcels were identified as potentially requiring a land use or zoning change; approximately 50 people attended.

The staff report also notes an additional public workshop scheduled for August 6 at the Columbia Memorial Space Center, giving community members and stakeholders a chance to review the Public Draft General Plan, ask questions, and provide feedback — the day after the Planning Commission received the status report.

The staff report states the project remains on schedule, with the Final EIR and Final General Plan to be presented to the Planning Commission for recommendation and then to the City Council for adoption by the end of 2026. Zoning Text Amendments and Specific Plan Amendments follow adoption.

Why It Matters for Site Selectors and Developers

The retail number is the headline, and it is unusually specific about category. A recapture-driven forecast tells a retailer or a shopping center developer which uses the trade area is underserved in. By dollar gap, the order is specialty/other ($135.2 million), motor vehicle and parts ($92.9 million), clothing and accessories ($80.6 million), building materials and garden supplies ($41.8 million), and home furnishings and appliances ($38.0 million). It also tells them where not to go — Downey already over-captures general merchandise and gasoline.

The office and industrial numbers are small in absolute terms but sit on top of extremely tight markets. A 2.0% office vacancy rate and 4.0% industrial vacancy rate mean effectively no available product. The study observes that these low vacancy rates "could potentially create new development opportunities beyond the relatively modest demand forecasts."

On housing, the composition signal is the actionable one. The model projects zero new detached single-family units and puts 74% of new supply in structures of five or more units, with the balance in townhomes. That is a substantial break from the last decade of Downey permitting, in which 94.5% of permitted units were single-unit. The pipeline data suggests the shift is already underway.

The parcel-level zoning consistency work matters for anyone holding land in Downey. More than 1,500 parcels were reviewed for zoning/General Plan mismatches, and the City has posted an interactive Story Map comparing current and proposed land use and zoning maps. Property owners can see how their designation may change before the Zoning Text Amendments are drafted.

The Risks and Obstacles

The forecasts are anchored to a growth projection the City itself is trying to exceed

The population and employment tables behind the retail, office, and industrial chapters all cite SCAG, which the study identifies as the Connect SoCal 2024 growth projections, and which show Downey adding roughly 500 residents over 22 years. TNDG applied a more aggressive scenario to housing only. The study says explicitly that expanded development capacity could push demand above the reported figures, which means the commercial numbers should be read as a floor tied to a particular assumption, not a ceiling.

Retail leakage is not the same as retail demand

The capture rates are described as theoretical maximums assuming Downey's retail inventory expanded enough to meet all resident needs locally. The study cites research prepared for the City showing that some residents shop in Cerritos and Long Beach because of the wider array of facilities there — breadth that a recapture strategy would have to match. The demand model also excludes online purchases entirely, which is a material omission in the categories showing the largest gaps.

Both commercial forecasts run below historical absorption

Office demand of roughly 21,700 square feet a year in Mid-Cities compares to 47,800 square feet averaged over the prior 11 years. Industrial demand of roughly 104,000 square feet a year compares to 190,400 square feet averaged over 24 years. CoStar's own 10-year forecasts show negative office net absorption and limited industrial net absorption in the submarket.

Land constraint is the binding limit across every category

The study describes Downey and surrounding communities as built out, holds detached single-family units flat for lack of available land, and cites decreasing land availability as a drag on industrial. Any material development is likely to be infill, redevelopment, or intensification of existing commercial corridors.

The report carries internal inconsistencies

Two different retail totals appear in the same chapter, and the Table III-11 total row does not equal its own column sum. The industrial narrative says "office" where it means industrial, and cites two different figures for Downey's industrial inventory. The introduction describes the report as evaluating three land use categories when it evaluates five. Population is stated as 111,173 (ESRI, 2023) in the retail chapter and 111,871 (DOF, 2025) in the housing chapter. The retail chapter's preamble names 2022 as the base year while every table and every other reference uses 2023. Two retail tables are titled "Downey Park Retail Trade Area," and an appendix table carries a "La Habra Retail Trade Area" heading over Downey figures. None of these change the direction of the findings, but they matter if you are quoting figures in an entitlement application or an investment memo.

Hotel demand is thin and back-loaded

The study reports no new hotels built in Downey between 1988 and 2021. The 109-to-172-room forecast represents a single property, and the study places it in the later part of the period, 2035 or after, once four already-planned submarket projects totaling 444 rooms absorb near-term demand.

What to Watch

This article is factual background and is not legal, financial, or investment advice.