Investor News: Downtown Los Angeles is Changing
Architects, designers, builders, the mayor of Los Angeles and his fans have long known this fact: Downtown Los Angeles has finally peaked in popularity. Shoppers are coming to the same conclusion: Downtown Los Angeles is the most underrated major city on planet Earth.
Well, actually, downtown Los Angeles has been running wonderfully since 1995, during which time the City of Los Angeles Community Redevelopment Agency committed to grading homes and clearing land for future high-rise commercial development. This period saw the cleanup and zoning of the entire neighborhood, more department stores on Broadway were closed, and many of downtown Los Angeles’ remaining financial corporations moved into vacant Class A office space on Bunkers Hill.
By mid-2013, downtown was noted as “a neighborhood with an increasingly hip and affluent residential population.” It also began to attract foreign millionaires, mainly from China, who rushed to invest in it, sometimes with cash. Downtown Los Angeles is the central business district of Los Angeles, as well as a diverse residential neighborhood of about 50,000 people at the time of this writing. A 2013 study found that the district is home to more than 500,000 jobs. Wikipedia mentions that the district declined economically and suffered from recession for decades until the early 2000s. Now, the construction is broken. Old buildings are being converted to new uses and skyscrapers have been built. Downtown Los Angeles is known for its government buildings, parks, theaters, and other public places.
In 2013, a study by the Downtown Center Business Improvement District (DCBID) showed that of the 52,400 people residing in Downtown Los Angeles, the demographic breakdown was 52.7% Caucasian, 20.1% Asian, 17.0% Latino and 6.2% African American; 52.9% women, 47.1% men; and 74.8% of residents were between the ages of 23 and 44. Median age of residents was 3. Median household income was $98,700. Median household size was 1.8. As for educational fun, 80.1% of residents had completed at least 4 years of university studies. The study was a self-selected sample of 8,841 respondents in the downtown Los Angeles area. It was not a “census”, but rather an exhaustive survey of consumers in downtown Los Angeles.
More recently, downtown Los Angeles has attracted a yuppie commercial sector from New York that is very interested in gaining ground for its projects.
The latest news is that a British company plans to refurbish a historic building in downtown Los Angeles to make it their own.
Hoxton and Los Angeles
Hoxton is a British hotel operator that, breaking news! – Just today (December 29) he bought a historic building in downtown Los Angeles for $30 million and plans to transform the decaying structure into a sleek, modern hotel, according to JLL, the broker involved in the deal.
Hoxton owns hotels in London and Amsterdam and plans to open another in New York and one in Paris next year. The fact that it’s LA (downtown for that matter) says something significant about the area’s growing appeal.
Hoxton describes his brand as the “anti-hotel,” where travelers find not just a bed, but “a place where people can eat, drink, work and play at any time of day.” His character is indicated by the description given to him by the British newspaper The Independent, which called Hoxton’s Amsterdam outpost “an almost painfully modern hotel in the most modern city in the Netherlands.”
Downtown Los Angeles seems to be perfect for it.
JLL has described downtown Los Angeles as the area where people look to eat, live and work. It is a trendy area with a diverse residential neighborhood of about 50,000 people at the time of this writing. According to a JLL map tracking millennials and baby boomers, downtown Los Angeles outnumbers baby boomers by 10% in a consumer market. In most industry markets in Los Angeles, the breakdown is 25% millennials to 21% baby boomers. Says Sara Lo, a senior manager specializing in the hospitality business at accounting and consulting firm Ernst & Young. “The center is driving and international companies are taking notice.”
The area’s hotel market has long been dominated by corporate giants catering to business travelers. Tourists flocked to West Hollywood or to seaside communities like Santa Monica and Marina del Rey. The area of town was once derided as a ghost town after five, but is now home to a bustling restaurant and bar scene. The developers outline pages of small “lifestyle” boutique hotels, with uniquely designed rooms and top-notch dining and nightlife offerings. And a recent Los Angeles Times commented that the investment is the latest sign that the neighborhood’s renaissance has created a place where tourists, not just business travelers looking for a comfortable environment, want to rest. Proof: now money is coming from abroad. Investors from all over the world also value the place.
A Hoxton hotel at 11th Street and Broadway would join several others nearby.
Directly across the street will be the 148-room Downtown LA Proper Hotel to be housed in a vacant building dating back to the 1920s. Two blocks away is the popular Ace Hotel, a boutique that opened last year in the historic United Artists building and is credited with attracting more investment to the area.
Even the big chains are resonating.
A Hotel Indigo, a trendy brand operated by InterContinental Hotels Group, is under construction as part of a Chinese company’s $1 billion Metropolis development near Staples Center.
The downtown market is strong, with an occupancy rate of 77%, which is higher than the 75% average of the top 25 markets in the country, Lo said. Some predict an imminent threat of overbuilding, but the designers don’t want to think about that. Ernest Wooden Jr., president of the Los Angeles Convention and Tourism Board, encourages the push. He says: “The projects currently underway are critical to our long-term ability to attract both leisure and business travelers,” he said in a statement.
Areas around 11th and Broadway that saw little investment in the past are now up and running, and several residential developments are underway, including about 650 apartment units by luxury developer Geoffrey Palmer. New York developer Georgetown Co. announced in September a $40 million project to redevelop the historic Herald Examiner building into ground-level creative offices and restaurants. Several buildings on Broadway are decrepit and have been empty for decades. Others are chipped, lined with graffiti, folded in two under crumbling roofs and bruised with peeling paint. It doesn’t matter: they are being dismantled at unwavering speed.
With New York yuppies, British shoppers, locals, and expats staking out their plots in the region, downtown Los Angeles has come a long way from its wobbly footsteps in the early 19th and 20th centuries. It has become an area to watch out for.
And local hard money commercial lenders are there to help investors. See http://www.HMLIvestments.com for more details.