DTLA Activity Picks Up

As prices continue to creep up (even if slowly), gas prices remain high, LA traffic continues to be hellish and people return to the office, there's a return back to urban centers. 

Why else do the largest concentration of highest paid professionals live in cities like LA, SF, NY and DC?

While the media talks about an exodus out of urban centers, which is also happening, there's never talk about the influx and relocation of those between city centers, as well as those who are opting to reside in multiple cities. If people are leaving in droves, then why isn't there more housing inventory?

The answer, a lot of people are keeping their places in LA, and buying second homes or investment properties out of state, or keeping their high-rent LA place as the investment property and moving to another cheaper state. It makes sense, especially if you have equity in the property.

And why is DTLA a big rental investment area? 

• Because of when DTLA was developed and conversions were happening, there is no rent control, for now anyway.
• Rents in the area are high
• High concentration of singles and professionals that make it easy to rent out for landlords
• Ever-increasing public transportation, making it easy for transplants to navigate
• High concentration of walkable neighborhoods and amenities

Why have LA home prices been so resilient?

The market in urban areas has come down since pre-COVID. On average, in NYC, about -18%, in SF, about -10% and in DTLA, about -4%. (Prices in the more suburban areas of LA are up about +1%)

Why has LA been more resilient? 

1. First, prices in LA were always lower than in NYC and SF. And suddenly, the nice weather, larger spaces and lower prices are looking pretty good when you can transplant yourself anywhere and work from home.

2. Remember, NYC was and still is the hardest hit COVID zone. LA, with it's huge population, has a fraction of the number of cases and deaths. Something is being done right in LA in terms keeping things safer. 

3. People still want a city, and LA, with its proximity to green spaces, mountains, beaches, deserts, etc, is proving to be the ideal place to settle during this uncertain time. 

4. There is a lot more space in LA than in other major cities. The average home size is about 1300sf in greater LA, and that's not including yards and other outdoor spaces. Compare that to 700sf is SF. You do get a lot more space for your money in LA, it's just a fact. 

5. The population. LA has a huge population. Where there is a population, whether employed or not, is going to need basic services, and that means jobs. Why else are companies like Amazon buying up warehouse spaces in LA? Because of demand for goods. 

Condos and Lofts Selling Nicely in DTLA, Rentals Softening a Tad

According to The Real Deal, "As Los Angeles grapples with a severe affordable housing crisis, a new study shows condo and loft sales remain strong...Prices in DTLA continued to increase, rising almost 4.5 percent year-over-year to $697 per square foot. That’s a more modest jump than last year, which saw prices rise up by 11 percent."

Rentals, however, are showing a softening, but still not a dip in prices. Competition is fueling this. 

Great Article on the [Second] Arrival of DTLA

From Bloomberg
https://www.bloomberg.com/news/articles/2018-01-05/where-to-eat-sleep-and-shop-in-downtown-la

"The emergence of Downtown Los Angeles, dubbed DTLA, is no news flash: The area has been on the rise since the late 1990s. But that was the start of a long uphill climb. By 2009, it had already undergone the transition from bleak badlands to vibrant cultural mecca, thanks to early pioneers like the L.A. Live entertainment complex and the Standard Hotel.  Since then, a slew of new hotels, restaurants, and museums have joined, and the neighborhood is showing no sign of slowing down.

'I don’t think it would be inaccurate to say that 15 years ago, it was an urban wasteland,” said real estate developer Tom Gilmore, referring to DTLA. An architect by trade, Gilmore almost single-handedly spearheaded the inner city’s rejuvenation. He first took note of DTLA’s architectural stock in the early ’90s: The inner city was a ghost town with potential, brimming with abandoned beaux arts and art deco buildings.' 

Gilmore’s strategy? To purchase and convert four old buildings into loft apartments, then add bars and restaurants. The timing couldn’t have been better. Simultaneously, Staples swooped in to build its 21,000-seat arena, and Lillian Disney (Walt’s wife) had lined up Frank Gehry to design a metallic curved concert hall—venues that were sure to draw thousands of visitors.

Those three projects and the Broad Museum have been cornerstones to a $20 billion investment in DTLA—with cash coming not just from Gilmore, but from a handful of forward-looking hoteliers, foreign companies, the city of Los Angeles, and several private sources. 

In the past 15 years, more than 3,500 hotel rooms have been added within the DTLA area, with several notable newcomers arriving in 2017, such as the 889-room InterContinental (now the tallest building on the West Coast, at 73 stories) and the offbeat, $30 million Hotel Figueroa, a redo of a 1926 icon.

The neighborhood’s highest-profile opening yet, the NoMad, is coming this month to the historic Giannini Place building. After standing empty for 17 years, it’ll now have 241 Italian-inspired rooms designed by Jacques Garcia, a library, a rooftop pool, and a restaurant by Daniel Humm and Will Guidara (of New York City’s Eleven Madison Park). A Soho House is reportedly on its way, too, this summer. 

To Gilmore, these are the brightest signs yet of the neighborhood’s arrival. “When a tastemaker brand like the NoMad comes in, you realize that whole block is going to change because of them, and you know that the bump from that is going to be significant,” he said.

Balancing out the big names is Row DTLA, a 30-acre complex of historic buildings that has been overhauled into a creative district: It includes a smart collection of independent retailers, businesses, and restaurants, and draws up-and-coming talent by offering short -to medium-term pop-up leases. That’s what allowed French independent menswear label Bonaparte 13 to open its first permanent store in the U.S. here, after testing the waters.

'They’re carefully curating the stores that come in here with a strong bias toward independent retailers,' said Andy Griffith of A+R, a stalwart furniture company in L.A. that recently opened at Row DTLA. Joining him in the neighborhood are other cult brands that have found standalone spaces. Locally born clothing brand 3.1 Phillip Lim recently opened a concept store in the Arts District, and Korean eyewear brand Gentle Monster opened its second U.S. store wedged between the historic Orpheum and Tower theaters. 

For all its progress, DTLA is far from finished. Gilmore, for one, says the area is only halfway there. There are major projects still under way: the renovation of Pershing Square and the addition of the Regional Connector Rail, part of a $1.7 billion high-speed rail project that will link a trio of lines (it’s expected to be completed in 2021). "