So here we are more than a quarter of the way through 2018, and downtown is still in a major development phase. Plenty of mixed-use and residential projects have begun taking shape over the past few months. Urban core development tends to be where more money has gone to in the past 24-36 months simply because there is more opportunity to realize profitable return without as much opposition from neighborhoods that already have luxury and higher rent units further west.
Los Angeles has been all for expanding it's multifamily and mixed-use footprint for several years, and what better than taking old dilapidated buildings and parking lots to do so. The best zoning exists in the downtown core area, and building vertically has been the most attractive model for developers to follow since the housing boom post-recession. Adaptive reuse projects happening in the Arts District have been a boon for the area, and more retail has migrated from all over the country and even across oceans to set up shop in what they feel is the next major hub for business.
Rent escalation has normalized and is at a more sustainable rate of growth. This has led to bigger incentives being offered by buildings during lease-up and with some offering as much as two-months of free rent, the net effect of a reduced lease on term has been an attractive tool that has gotten the vacancy rate down to low double-digits over the past six months. The most active part of downtown remains South Park, where new projects are scheduled for delivery to market through 2020.
Major arteries to the Westside like Olympic and Wilshire are often the reason people find living downtown in newer buildings more attractive than mid-way neighborhoods asking similar rents. Downtown has had a renaissance that I simply have had the pleasure of watching unfold for the last decade. I still remember when there were no new towers to rent an apartment in. The walk-ability of downtown was pegged in the financial district, and no nightlife really existed here. Now anyone can walk out of their apartment and grab dinner and drinks on multiple rooftops and enjoy the night in a city buzzing with energy. To progress!
Commercial real estate broker and investor by design. Automotive and lifestyle enthusiast by choice. Healthy should be your definition of wealthy.