Prior to the pandemic, Downtown Los Angeles was a bustling and vibrant metropolis that was developing at a rapid pace. When COVID-19 hit, many businesses closed their doors, and a significant decrease in tourists and visitors to Downtown led to virtually empty streets. But as vaccines are rolled out and cases continue to decrease, hope appears to be on the horizon.
Bisnow recently hosted a virtual webinar, “Future of Downtown Los Angeles: Predicting DTLA’s Strengths & Weaknesses in 2021 & Beyond,” during which five industry experts discussed what lies ahead.
The discussion kicked off with a presentation by Elan Shore, director of research and special projects at Downtown Center Business Improvement District (DCBID). He gave a preview of the DTLA Virtual: Development Tour, an online tour that offers a bird’s-eye view of Downtown’s continuing transformation through interactive technology, digital mapping, high-definition photography and drone video footage with in-depth market stats and project specs.
The Development Tour highlights the top projects that either have been recently completed, are under construction or have been proposed in Downtown, along with key deals and market data. It can be accessed at downtownla.com/
virtualtour and features four interactive tour stops that take viewers behind the scenes of some of DTLA’s most highly anticipated developments.
“When the pandemic hit and we realized we weren’t going to be putting 50 people on a bus anytime soon, we started working on this alternative, and thus our virtual tour was born,” Shore said. “All of the images are 360-degree panoramic, so you can turn all the way around and see everything in the surrounding area. In the coming weeks and months, we will be adding existing office, residential, retail and hospitality tours, plus the ability to create custom tours tailored to your needs and interests.”
The webinar was moderated by Max Shapiro, a commercial real estate attorney from Allen Matkins. The panel’s featured presenters included Clare De Briere, executive vice president and regional manager for Skanska, a leading project development and construction group; John Barganski, SVP of leasing, Western region, Brookfield Properties; Ricardo Pagan, CEO of Claridge Properties; Stephane Lacroix, general manager of Downtown Los Angeles Proper Hotel; and Justin Weiss, vice president of Kennedy Wilson Brokerage.
Weiss said that while retail activity is slow, leasing continues, and he has a dozen in the works.
“Of all the neighborhoods in LA, DTLA was hardest hit, but it’s obvious why,” Weiss said. “However, if you look at the sheer magnitude of investment in Downtown, there are approximately $4.5 billion worth of projects right now that are just under construction. I’m not going to sugarcoat it — retail activity is low right now, but most tenants are thinking long term and just trying to get through the present.”
Weiss added that restaurants are also opening and that second-generation restaurant spaces are the most sought after because they are already built out and don’t require a huge investment to get up and running.
Landlord Brookfield is the largest owner of Downtown LA class A high-rise space and has over 10 million square feet of office space in its Western region portfolio. While 80% to 85% is leased, Barganski said the space is experiencing physical occupancy of about 10% to 15%.
“The last year has been spent investing huge sums of capital and human capital to change how those workplaces interact with our users,” Barganski said. “I think people will return to the office, but what they’ll return to will be different on the inside.”
When asked how the pandemic has changed the way her company is developing projects, De Briere said Skanska had been investing in technologies associated with healthy building and sustainability over the last decade, so they won’t be doing things that much differently than they already have.
“We have a building in the Arts District that we’re designing right now, and we have an exterior corridor around every one of the office floors and a garden space on every single floor in order to create that indoor-outdoor connectivity,” De Briere said. “We also employ touchless technology on virtually all of our buildings, and we’ll continue to do that. I do think that we’ll start to see smaller buildings so that tenants can control the entirety of their environment and provide for the health and safety of employees and customers.”
When discussing the impact of COVID-19 on the hospitality industry, Lacroix said he and his team consider ways to reconnect on a deeper level with the LA community. The Downtown Los Angeles Proper Hotel, which is scheduled to open in June, is one of the most anticipated high-design hotel openings this year.
“At all of our properties, we always find a way to partner with successful local businesses and restaurants,” Lacroix said. “Our hotel is located two blocks away from the Orpheum Theatre, and I love the energy and true urban feel of the area. When it comes to the safety and health of our team, in order for customers to be confident, we have to ensure that we do our due diligence and have a robust plan in place.”
Pagan also talked about his upcoming developments, which include a $2 billion Angels Landing on Fourth and Hill Street that will bring two luxury hotels, more than 400 for-sale and for-rent residential units, and more than 36,000 square feet of commercial space to the side that is an undeveloped hillside and former park. Even though the project may be delayed for a year and a half, Pagan said that the reason was due to “political headwinds” and not the pandemic. As of September, developers were still anticipating the project would be open for the 2028 Olympics, which LA is scheduled to host.
“People love urban cities, and once people gain confidence and are comfortable being near each other again, in the long term, people will return to Downtown,” Pagan said. “Looking ahead five to 10 years, we believe that underdeveloped cities like LA are key. New York is already built out, as is Seattle and most major cities.”
De Briere added that Downtown is starting to see more neighborhood pockets coming up, which create a sense of community that people are drawn to.
“I’m looking forward to seeing how each one of those neighborhoods will continue to evolve,” De Briere said. “Bunker Hill has a very different feel than the Arts District. The nice thing is that they’re all connected by transit now. So you can get to all of them, but they each have their own community and feel, which is important. As a developer, what I’m building in one part of Downtown is very different than what I would build in another part. As long as we maintain that sense of uniqueness as we build for the community, I think that will create a really vibrant and diverse Downtown.”
Bisnow is the largest producer of news and events within the commercial real estate industry across North America, Canada, the United Kingdom and Ireland. Operating in more than 50 cities across North America and Europe, Bisnow hosts over 300 events each year with the purpose of informing, connecting and advancing the commercial real estate community to do more business.