Investor News: Downtown Los Angeles is Changing
Architects, designers, builders, the mayor of Los Angeles and his fans have known it for a long time: Downtown Los Angeles has finally reached its popularity. Buyers come to the same conclusion: Downtown LA is the most undervalued major city on planet Earth.
Well, actually, downtown Los Angeles has been doing great since 1995, when the City of Los Angeles Community Redevelopment Agency began leveling homes and clearing land for the development of future commercial skyscrapers. This period saw the clearing and zoning of the entire neighborhood, the closing of more major stores on Broadway, and the closure of many of the remaining downtown LA financial companies moving into vacant Class A offices in Bunkers Hill.
As of mid-2013, Downtown was considered «a neighborhood with an increasingly hip and affluent residential population.» It began to attract too many foreign millionaires – mostly from China – who rushed to invest there, sometimes with cash. Downtown Los Angeles is the central business district of Los Angeles, as well as a diverse residential neighborhood of approximately 50,000 people at present. A 2013 study found that the district is home to over 500,000 jobs. Wikipedia mentions that the neighborhood declined economically and suffered a downturn for decades until the early 2000s. Now, construction is fast. Old buildings are modified for 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 Downtown Center Business Improvement District (DCBID) study showed that of the 52,400 people residing in downtown Los Angeles, the demographic breakdown was 52.7% Caucasian, 20.1% D 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. The median age of residents was 3 years. The median household income was $98,700. The median household size was 1.8. In terms of educational attainment, 80.1% of residents had completed at least 4 years of college education. The study was a self-selected sample of 8,841 respondents in the Downtown LA area. This was not a «census», but rather a comprehensive survey of downtown LA consumers.
More recently, Downtown LA has attracted a yuppie New York commercial sector that is only too eager to stake out the ground for their projects.
The latest news is that a British company is planning to redo a historic building in downtown Los Angeles.
Hoxton and Los Angeles
Hoxton is a British hotel operator who – breaking news! – Just Today (December 29) bought a historic building in downtown Los Angeles for $30 million and plans to turn the crumbling structure into a hip, stylish hotel, according to JLL, the brokerage involved in the agreement.
Hoxton has hotels in London and Amsterdam and plans to open another in New York and one in Paris next year. The fact that he chose LA – downtown for this – says a lot about the growing appeal of the area.
Hoxton describes its brand as «the anti-hotel,» where travelers find not just a bed, but «a place where people can eat, drink, work, and play any time of the day.» Its character is indicated by the description given by the British newspaper The Independent, which called the Hoxton outpost of Amsterdam «an almost painfully hip hotel in the hippest city in the Netherlands».
Downtown LA seems to be perfect for this.
JLL described downtown Los Angeles as the neighborhood where people seek to eat, live and work. It is a trendy area with a diverse residential area of about 50,000 people at present. According to a JLL map that tracks millennials and baby boomers, downtown Los Angeles outpaces baby boomers by 10% in a consumer market. In most industry markets in Los Angeles, the split is 25% Millennials to 21% Baby Boomers. According to Sara Lo, senior hospitality executive at Ernst & Young accounting and consulting firm. “Downtown is booming and international companies are taking note”
The region’s hotel market has long been dominated by giant corporations that cater to business travelers. Tourists flocked to West Hollywood or beach communities such as Santa Monica and Marina del Rey. The area of town was once considered a ghost town after five years, but is now home to a bustling restaurant and bar scene. Developers draw pages of small «lifestyle» boutique hotels – those with uniquely designed rooms and upscale dining and nightlife offerings. And a recent Los Angeles Times commented that the investment is the latest sign that the neighborhood’s revival has created a place where tourists, not just business travelers seeking a comfortable environment, want to rest. Proof: the money is coming from abroad now. Investors from all over the world also appreciate the place.
A Hoxton hotel at 11th Street and Broadway would join several others nearby.
Just across the street will be the 148-room Downtown LA Proper Hotel which will be housed in a vacant 1920s building. 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 getting into it.
An Indigo Hotel, a hip brand operated by InterContinental Hotels Group, is under construction as part of a billion-dollar Chinese company’s Metropolis development near the Staples Center.
The downtown market is strong — with a 77% occupancy rate that beats the 75% average of the nation’s top 25 markets, Lo said. Some predict an imminent threat of overbuilding, but designers don’t want to think about it. Ernest Wooden Jr., chairman of the Los Angeles Tourism & Convention Board, encourages this momentum. He said: «The projects currently underway are critical to our long-term ability to attract both leisure and business travellers,» he said in a statement.
Areas around 11th and Broadway which have seen little investment in the past are now ramping up and several residential developments are underway, including around 650 apartments from luxury developer Geoffrey Palmer. New York-based developer Georgetown Co. announced a $40 million project in September to redevelop the historic Herald Examiner building into creative offices and restaurants on the ground floor. Several buildings on Broadway have been decrepit and empty for decades. Others are chipped, plastered with graffiti, bent double under crumbling ceilings and bruised with peeling paint. No matter: they are dismantled at speed without hesitation.
With New York yuppies, British, local and expat shoppers staking their plots in the area, downtown Los Angeles has come a long way from its shaky stages of the early 19th to 20th centuries. It has become an area to be reckoned with.
And local commercial lenders are there to help investors. See http://www.HMInvestments.com for details.