|
|
|
|
3/01/23
|
This report provided by Downtown Center Business Improvement District
While it faced significant challenges like most city centers across the country, Downtown LA (DTLA) weathered a turbulent 2022 relatively well and is showing signs of solid new growth across its increasingly diverse economic sectors as it enters 2023, according to the Downtown Center Business Improvement District’s just released Year-End 2022 Downtown LA Market Report.
Once reliant almost exclusively on the office market, DTLA’s economic engine is now also powered by a considerable multifamily market that is increasingly shaping DTLA’s transformation from a 9-5 business district to a vibrant, 24/7 mixed-use neighborhood. With residential occupancy and rental rates topping pre-pandemic records, and the area’s hospitality, food and beverage industries showing steady improvement, there is good reason for optimism heading into 2023.
Hospitality revenues per available hotel room in DTLA have climbed significantly throughout the year and are now at 92% of pre-pandemic levels. Similarly, the retail market’s food and beverage sector has experienced steady growth in 2022, with the opening of more than 34 new offerings, led by Michelin-starred chef Daniel Rose’s recently launched Café Basque at The Hoxton Hotel.
“Despite headwinds in the office market, DTLA’s residential population growth continues to have a positive impact on the overall DTLA economy, providing stability as the office market finds its balance,” stated Suzanne Holley, President and CEO of the DCBID. “And as we usher in the new year, workplace visits are on the rise statistically, and we are seeing increased leasing activity and investor interest in the market.”
While office workplace occupancy in the greater LA market has only recently reached 50%, as reported by Kastle Systems, 2022 visitation to all workplaces in DTLA (not just offices) reached 68% of pre-pandemic levels, a 26% improvement compared to the start of the year. At the same time, the DTLA office market has experienced a 22% increase in leasing activity from 2021, and office lease rates remain at 96% of pre-pandemic levels.
2022’s robust commercial real estate sales totaled more than $1.56 bil and include Northland’s $504 mil purchase of THEA at Metropolis, a 59-story, 685-unit apartment tower and one of the largest single asset multifamily acquisitions in U.S. history. In April, Laguna Point Properties purchased the SB Apartments Portfolio, a five-property acquisition consisting of more than 1,030 units, for $402 mil.
2022 Year End Market Report Highlights:
Residential:
• 93.1% Occupancy rate for Apartments; Flat Year Over Year (YOY) – 8.6% higher than Q4 2019
• $3.33 PSF Average for Apartments; Flat YOY – 3.4% higher than Q4 2019
• $2,822 Average Effective Rent per Unit; Flat YOY – 5.1% higher than Q4 2019
Office:
• 21.0% Office Vacancy; 6.0% increase YOY
• $3.82 PSF Class-A Lease Rate; 0.5% increase YOY
• 2.2M SF YTD Leasing Activity; 22.2% increase YOY
Retail:
• 6.8% Vacancy Rate; 6.25% increase YOY
• $3.20 PSF Lease Rate; 2.9% increase YOY
Hospitality:
• 68.2% YTD Occupancy Rate; 27.5% increase YOY
• $230.60 YTD Average Daily Rate; 27.9% Increase YOY
• $157.20 YTD Average RevPAR; 63% increase YOY
Investor confidence in DTLA’s residential market continues unabated. During 2022, DTLA saw the completion of The Grand LA on Bunker Hill, the $1 bil, Frank Gehry-designed mixed-use complex that is perched on Grand Ave across from the Disney Concert Hall. Home to the new 28-story Conrad LA hotel, the complex also features 176k sf of retail space and a 39-story, 436-unit residential tower. Brookfield and Mitsui Fudosan continue construction on their 65- and 41-story apartment towers across from each other on Figueroa, and expect completion in 2023. And prolific DTLA developer, Onni Group, broke ground on their 60-story Olympic and Hill apartment tower.
The DTLA hospitality industry continues its surge toward pre-pandemic levels with occupancy levels at 68.2%, a 27.5% increase year over year. Similarly, RevPAR (average revenues per available room) are up 63% year over year at $157.20. Further, Lightstone’s dual branded Moxy and AC Hotel tower will bring an additional 727 guestrooms, 13 restaurants, bars, and lounges, four outdoor terraces, a pool deck, and 10,000 square feet of meeting and events space when completed in Q1 of 2023.
“Despite three consecutive years of extremely challenging conditions, DTLA continues to be an attractive market for investors,” noted Nick Griffin, Executive Director for the DCBID. “And as companies consider their options in the future of office work, DTLA continues to offer the kind of diverse, dynamic, convenient, and amenity-rich environment that today’s employees demand,” Griffin concluded.
The full DCBID 2022 Year-End Downtown LA Market Report can be viewed HERE.
|
|
 Return to the Archive page
|
|
|
|
|
|
Printer-friendly Version
Email an Associate
