Like central business districts around the world last year, Downtown Los Angeles got hammered by the pandemic, its streets emptied, offices and stores cleared out.
In its year-end market report, the Downtown Center Business Improvement District tallied those grim numbers, which showed DTLA real estate activity slowed across the board. Major projects, however, did push ahead.
Occupancy rates declined in all types of real estate, with hotels the hardest hit given lack of long-term leases. Residential rents fell, with average effective rent per unit dropping from $2,737 at the end of 2019 to $2,402 by December 2020. Hotel room rates also tumbled, from $216 a day to $138, while office and retail rents only showed modest declines.
But with vaccine rollouts providing a tangible end date to the crisis, the Downtown Center BID — coalition of over 2,000 property owners in the central business district — sounded a note of optimism.
Executive director Nicholas Griffin wrote in the report there was “evidence that the economic impact, as painful as it had been for many, may be less severe or lasting than initially feared.” That has “rekindled enthusiasm for Downtown’s continued revitalization,” he added.
The market report pointed to major ongoing projects as evidence of this enthusiasm. As one example, Related Companies’ $1 billion the Grand in Bunker Hill, designed by Frank Gehry, reached its halfway mark in August with opening expected in 2022. Two residential towers at 8th and Figueroa, one from Brookfield Properties and one from Mitsui Fudosan, broke ground last year.
The area’s investment sales market also got a boost last summer when Silverstein Properties acquired the US Bank Tower from Singapore’s OUE Limited — although the $430 million sale price was a significant discount from the $700 million the seller had been targeting pre-pandemic.