DOWNTOWN LOS ANGELES - In the past few years people have grown accustomed to the wave of investment rolling in to Downtown Los Angeles. Each week seems to bring either the opening of a development or the announcement of a new housing or hotel project. Just look at the cranes that are dotting the skyline.
Amidst this rush of development an important pattern has emerged: Call it the return of the Downtown mega-project.
Over the past several months, the Central City has seen major progress or significant announcements on four developments that stand to vastly alter the community. Although any one of these efforts would be a notable addition to the landscape, having all of them happen at the same time in one compact area is jaw dropping.
Last Friday brought the groundbreaking of the first phase of the long-delayed Metropolis in South Park. The following day the pouring of the foundation of the $1 billion replacement of the Wilshire Grand Hotel was slated to begin (after Los Angeles Downtown News went to press). A short walk east of the Wilshire Grand work has started on the renovation and repositioning of The Bloc, the shopping/office/hotel complex long known as Macy’s Plaza. Up on Bunker Hill, meanwhile, developer Related Cos. has also been reversing difficult trends of the past as it powers forward on new plans for a $650 million complex that will be highlighted by two towers designed by Frank Gehry.
The collection of projects might seem unprecedented, except for the fact that there is a precedent for it, and the precedent was also in Downtown. In the late 1990s, the community saw the simultaneous building of Walt Disney Concert Hall, Staples Center and the Cathedral of Our Lady of the Angels. A fourth mega-project, a proposed renovation of the Coliseum in Exposition Park to hold an NFL team, never came to fruition.
That burst of iconic development helped lay the foundation for the residential revolution that started in the year 2000. That first wave of housing in turn ushered in a rush of restaurants and bars and began Downtown’s transformation into a hub of evening entertainment. Though the ensuing recession slowed or killed many projects (including scuttling an earlier version of Related’s Grand Avenue plan), the critical mass created by the housing and nightlife projects has provided the spark for the current return of the mega-project. Yes, it all goes around in a dollar-fueled circle.
Still, this new spate of development has some notable differences from the past. The Wilshire Grand, The Bloc, Metropolis and the Grand Avenue plan all are, to use a phrase, many-splendored (the common real estate term is the less colorful “mixed-use”). Rather than have a singular aim, such as Disney Hall being home to the Los Angeles Philharmonic, each of these projects seeks to do multiple things, and all are situated in busy areas that will capitalize on pedestrian traffic. Additionally, all four will have a hotel component (including a refurbished Sheraton at The Bloc and an upscale SLS Hotel in the Grand Avenue plan). The collection of what one can expect will be four- and five-star establishments will help address Downtown’s shortage of hotel rooms.
One can also expect each project to add to the area’s surging retail and dining scene. Another intriguing addition, first at the Wilshire Grand site and potentially later at other mega-project locations, is the creation of office space. Downtown has not seen new office development in more than two decades, and the vacancy rate of approximately 19% in top-tier skyscrapers explains why. Still, if white-collar or creative firms rush to the new building (where the 400,000 square feet of office space will be below the 900 hotel rooms), other office projects will certainly follow.
While exciting and potentially transformative, there are concerns. The opening of multiple mega-projects in a compressed time period will mean intense competition. If there is not yet sufficient activity at the Convention Center, for example, then the hotels could suffer in the short term.
However, Downtown has a recent history of quickly catching up with a building boom. Back around 2006, when the previous wave of residential complexes were opening almost weekly, there was more supply than demand. That oversaturation only lasted for a short time, though, and now the community has a lack of housing, as evidenced by low vacancy rates and climbing rents. That will be alleviated in the coming year as new apartment projects open.
Still, it is the mega-projects that draw the most attention and give the strongest indicators of a community’s economic health and potential. Downtown is lucky to have four of them happening at once. It hints at an even more vibrant future.
© Los Angeles Downtown News 2014