Despite pandemic, DTLA showing ‘remarkable growth,’ report says

Downtown Los Angeles occupies just 1.4% of the city’s footprint, but it accounts for a significant portion of the city’s residential, office, hotel and retail development with more than 170 projects on the way, according to a recent report.

The DTLA 2022: Outlook and Insights analysis, compiled by the city’s Downtown Center Business Improvement District, shows the downtown area houses 47% of the city’s 40 million square feet of office space and 19% of its job base.

It also contains 17% of L.A.’s 4.3 million square feet of retail space and 18% of the city’s 44,500 hotel rooms.

“Downtown Los Angeles is the primary hub of commercial activity for Los Angeles, and the most significant job center in the region,” the report said. “It is also a diverse collection of thriving urban neighborhoods, and a popular destination with national and global recognition.”

Brian Saenger, president & CEO of The Ratkovich Co., and his company have developed several office projects in DTLA over the years.

“I’m more optimistic than I was before about the recovery and resurgence of downtown,” he said. “Being an office dweller, I wasn’t sure what the future would look like based on the number of people I see coming downtown and frequenting restaurants near my office.”

A key Ratkovich project in the city’s core is 800 Wilshire, a 16-story, mixed-use development with 220,000 square feet of commercial and conventional-style offices housed in a striking glass exterior.

Saenger said the COVID-19 pandemic has accelerated a trend that was already underway in the office sector with more remote work and hybrid scheduling.

“There is a whole spectrum of what will happen with office space,” he said. “It will be everything from businesses bringing employees back to the office full-time, to employees not going back at all. It will depend on how companies feel they have to handle those needs.”

Ratkovich offices have remained open throughout the health crisis, although they haven’t all been fully staffed.

“We’ve been flexible,” Saenger said. “There is some hybrid scheduling.”

Like other major urban centers across the U.S., Downtown LA was heavily impacted by stay-at-home orders and other health restrictions during the height of the pandemic, with trips to the downtown area dropping dramatically as a result.

But 2021 saw a substantial recovery in visitation, the report said, with the residential sector bouncing back stronger than ever and the hospitality sector regaining much of its losses.

DTLA’s residential occupancy rate for the fourth quarter of 2021 was 94%, up from 88% a year earlier, and the average rental rate was $2,759 per unit, compared with $2,400 in the fourth quarter of 2020.

The office vacancy rate was 20%, up from about 16% a year earlier. Retail vacancy fell to 6% from 7% in the fourth quarter 0f 2020, and hotel occupancy stood at 54%, up from 40% during the fourth quarter of 2020.

Planning to stay

Early in the pandemic, there were nationwide fears of a residential exodus from downtown areas. But the study shows residents living downtown are mostly committed to staying put.

Twenty-five percent plan to remain 10 or more years, 40% plan to stay another three to 10 years, 26% plan to stay one to two years and 9% expect to stay less than a year.

“Our surveys over the past decade have shown our residents to be passionate about living downtown and being part of the DTLA community,” the study said.

A multitude of projects

A slew of residential projects — many with a retail component — are underway.

“We are currently tracking 43 projects under construction and 130 projects that are in the planning process,” said Nick Griffin, executive director of the Downtown Center Business Improvement District.

The Grand LA, an ambitious project designed by renowned architect Frank Gehry, is close to opening. The mixed-use development will include a 45-story residential tower with 400 residences (including 89 new units of affordable housing), a 28-story, 305-room hotel, 12,000 square feet of meeting rooms and facilities and 164,000 square feet of retail space, including restaurants and shopping spanning three levels of landscaped, open terraces.

“The hotel is taking reservations for June and leasing for the residential units will begin this summer,” Griffin said. “The Grand really embodies where we see downtown going. We feel it’s a harbinger of what we’ll see in the coming years.”

Angels Landing, a $1.6 billion, twin-tower luxury hotel project being built in L.A.’s Bunker Hill neighborhood, is also in the pipeline and scheduled to be completed in 2027. The development by MacFarlane Partners and fellow developer Don Peebles will span more than 1.2 million square feet, with city-view condominiums and apartments, retail shops and restaurants.

The complex will also include Angels Landing Plaza, a modern pedestrian-centered and transit-adjacent urban plaza.

“Our goal is to have it completed before the 2028 Olympics,” Peebles said. “The entitlements are done and we’re in the design phase.”

Ato, a seven-story, mixed-use development in the heart of Little Tokyo, is expected to finish by year’s end. The etco Homes building will include 77 studio, one-bedroom and two-bedroom flats, 2,500 square feet of retail space, a rooftop pool and lounge, an outdoor theater and a fitness center.

“The residential building boom in downtown Los Angeles has spurred a modern renaissance in Little Tokyo,” etco President Afshin Etebar said in a statement. “It’s attracting homebuyers seeking an energetic urban environment in this historically Japanese neighborhood.”

Construction is also underway on Alloy — a 35-story project at 520 Mateo St. with 475 live/work apartments, 105,000 square feet of offices, more than 18,000 square feet of ground-floor commercial space and a 650-car garage. The building is being developed by Carmel Partners.

“The number of projects that are either proposed or under construction in downtown L.A. is pretty significant,” Griffin said. “We see a steady flow in the coming years.”