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Downtown LA Hospitality Market Surges in Q2 2022 With Occupancy Increasing 60% Over Q2 in 2021

8/30/22

The Downtown Los Angeles (DTLA) Hospitality Market continued its year-and-a-half-long surge during the year’s second quarter, according to the Los Angeles Downtown Center BID’s (DCBID) just released Q2 2022 DTLA Market Report. DTLA’s Hospitality occupancy level increased to 69%, a 60% increase over Q2 in 2021, representing the sixth consecutive quarter of occupancy growth. Perhaps more impressively, DTLA’s RevPAR, which measures total revenue per available room, rose more than 135% from this time last year, recovering nearly 90% of its pandemic-driven drop. This remarkable growth follows that of the DTLA residential market, where occupancy and lease rates have already surpassed pre-Covid highs.

In addition to growing occupancy in existing properties, DTLA also welcomed two new high-profile hotel properties during the quarter. Hilton Hotels’ luxury brand, Conrad, just opened a 305-rooom luxury hotel tower as part of the just completed $1 bil The Grand mixed-use complex, across from Walt Disney Concert Hall. Designed by Frank Gehry to complement his iconic theater, The Grand also features a 436-residence apartment tower, dubbed The Grand by Gehry, and more than 160k sf of retail, including three new dining options from international culinary innovator, José Andrés. In the heart of the Downtown Center district on 7th Street’s ‘Restaurant Row,’ the former NoMad Hotel has been reborn as Hotel Per La, complete with a new ground floor restaurant and cocktail lounge, coffee bar, and Bar Clara, DTLA’s latest rooftop pool bar.

As the hospitality market continues its ascent, the DTLA residential market forges ahead as the pace setter for the dynamic urban center, with occupancy and lease rates at 93.5% and $2,874 respectively, both exceeding pre-pandemic levels. In addition to Gehry’s new tower on Bunker Hill, DTLA also welcomed SP7, Skid Row Housing Trust’s 100-unit permanent supportive housing development for veterans and those emerging from homelessness. Named for its location at San Pedro and 7th Streets, SP7 is one of the first projects to receive funding through Measure HHH.

While the DTLA office market continues to deal with the challenges and uncertainty related to the evolution of office work, there were some strong positive activities in the second quarter including SPARC Group’s 164k sf lease at Brookfield’s California Market Center in the Fashion District. SPARC is the parent company of popular brands Aéropostale, Forever 21, Lucky Brand Denim, Nautica, among others. Office property transactions included Laguna Point Properties LLC’s $402 mil purchase of Royalty Realty’s five-property SB Apartment Portfolio, and East End Studio’s $240 mil purchase of SunCal Companies’ 6th & Alameda Food & Produce Center in the Arts District, where they have plans to develop a new 15-acre, $800 mil movie and television studio.

“The second quarter of 2022 was a big shot in the arm to our hospitality market and demonstrates the powerful draw of DTLA even in the face of pandemic uncertainty,” stated Suzanne Holley, President and CEO of the DCBID. “As our hotels continue to fill and workers return to the office, we’ll experience increasing growth in the retail and food and beverage market.”

In Q2, the retail market continued to hold steady in both vacancy and lease rates that are near pre-pandemic levels. DTLA welcomed the opening of London-based Bike Shed Moto Co, a 30k sf dining and retail experience featuring a massive 325-seat restaurant, cafe, lounge, bar, and multi-brand retail emporium with event space, barbershop, tattoo shop and private members bar. Nearby, Pizzeria Bianco debuted at ROW DTLA, bringing what is widely regarded as the best pizza in the U.S. to the Arts District.

“As anticipated, DTLA’s second quarter demonstrated growing momentum in both hospitality and office, the markets hit hardest by the pandemic,” noted Nick Griffin, Executive Director for the DCBID. “Looking forward, we expect the market to continue to be driven by our robust residential and surging hospitality markets, with expanding cultural and retail patronage as workers return to the office. DTLA’s vibrant urban lifestyle will be driven to new heights as we move forward in 2022,” Griffin concluded.

2022 Q2/Year-End Market Report Highlights:

Residential:

• 93.5% Occupancy rate for Apartments; 3.3% increase Year Over Year (YOY)
• $3.37 PSF Average for Apartments; 7.3% increase YOY
• $2,874 Average Effective Rent per Unit; 12.2% increase YOY

Office:

• 20.2% Office Vacancy; 8.0% increase YOY
• $3.74 PSF Class-A Lease Rate; 1.5% decrease YOY
• 1.4M SF YTD Leasing Activity; 100% increase YOY

Retail:

• 6.3% Vacancy Rate; flat YOY
• $3.16 PSF Lease Rate; 3.9% increase YOY

Hospitality:

• 67% YTD Occupancy Rate; 59.5% increase YOY
• $228.38 YTD Average Daily Rate; 48.3% Increase YOY
• $153.08 YTD Average RevPAR; 136% increase YOY


The full DCBID 2022 Q2/Year-end DTLA Market Report can be viewed at: www.DowntownLA.com/MarketReport2022-Q2








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