Downtown Center BID Releases Q1 2017 Downtown Los Angeles Market Report

The on-going residential boom in Downtown Los Angeles has attracted a steady influx of fashion, dining, grocery and services, and is now drawing an increasing number of the national brands that appeal to Downtown’s broad demographics, according to the Q1 2017 Downtown Market Report, released today by the Downtown Center Business Improvement District [DCBID].

According to Carol Schatz, the DCBID’s President and CEO, “The DTLA retail market has matured significantly. Where we once had to vigorously recruit basic services like grocery stores, landlords are now focused on curating just the right retail mix for their specific properties and expanding the range of offerings in each of Downtown’s unique neighborhoods. The nation’s leading brands and fast casual eateries have certainly taken notice and are migrating to the city center.”

With 12,300 residential units currently under construction, the Downtown population is expected to swell to 85,000 from 65,000 over the next few years – an incredible 30% growth – and new retailers are poised to capitalize on a hungry market still in its infancy. For the first time since the recession, more than 2,700 of those units are for-sale condos, a 47% increase that highlights investor confidence in the Downtown market. But the housing and retail markets are just part of the DTLA growth story.

According to the report, the office market, which continues to see decreasing vacancies and increasing rents, now has 3.2 million square feet under construction. DTLA’s hospitality market is also expanding, with 2,400 hotel rooms being built to meet the growing demand from tourist and convention center business. Upon delivery, DTLA will have almost 11,000 rooms, with an additional 6,400 in planning.

Notable deals from the first quarter include national fashion chain Nordstrom Rack signing a long-term lease at Brookfield’s FIGat7th. Other Q1 newcomers include Hotel Indigo, Tuck Hotel, Brigade LA, Blu Jam Café, Holy Grail, American Kids, Bar Clacson, and a flagship store for fashion-tech bag and accessory retailer, Incase.

“While keeping a watchful eye on the national economy, DTLA market conditions remain strong and we cannot wait to see who and what comes next,” stated Schatz.

Q4 Market Report Highlights:

Office:
* 16.5% Office Vacancy; 4.1% decrease YOY
* $3.40 PSF Class-A Lease Rate; 5.6% increase YOY
* 535,190 SF YTD Leasing Activity

Retail:
* 2M SF Under Construction + 2.4M SF Proposed
* $2.63 PSF Lease Rate; 3.5% increase YOY
* 109,34 SF YTD Net Absorption

Hospitality:
* 77.4% YTD Occupancy Rate; .65% increase YOY
* $215.80 YTD Average Daily Rate; .50% increase YOY
* $166.95 YTD Average RevPAR; held steady YOY

Residential:
* 89.8% Occupancy rate for Apartments; held steady YOY
* $2.80 PSF Average for Apartments; 3.3% increase YOY
* $2,573 Average Effective Rent per Unit: 2.0% increase YOY

The DCBID Q1 2017 Market Report can be viewed at: DowntownLA.com/Q12017

Photo Credit: Hunter Kerhart Photography