Producing the Downtown LA Market Report each quarter involves a lot of numbers and stats – from occupancy rates and new construction figures to square footage and leasing percentages – and making sense of the patterns and trends in all that data. But as any seasoned developer knows, to really understand what's going on in a market, you must get out there yourself and walk the streets, tour the properties, listen to the people, and experience the environment in real time.
Fortunately, the Downtown Center BID provides several opportunities to do just that, including our quarterly DTLA Development Tour, which brings the Market Report to life for real estate and other professionals, and our monthly DTLA Housing Tour, aimed at potential residents, but also a good opportunity for anyone interested in the Downtown market.
The Q2 Market Report shows the residential sector continuing to drive Downtown's growth – with strong demand pushing vacancy down 3.4% despite five quarters of record deliveries, including 2,300 new units in Q1 alone. But to get a more intimate feel for what's behind that demand, tag along with a group of prospective residents on our tour of 825 Hill, which is almost 80% leased after only six months on the market (well ahead of their projections), and hear them rave about the efficient layouts, quality finishes, amazing amenities, and beautiful balconies that come with every unit in Onni's newest Downtown property.
The remarkable growth of the residential population in DTLA is also attracting a steady stream of new retail and restaurants, enlivening key corridors like 8th Street, right around the corner from 825 Hill. Already anchored by Whole Foods, Shake Shack, Starbucks, and SweetGreens, this stretch welcomed Tocaya Organica this quarter, and a quick glance at their packed patio tells you all you need to know about the vitality of the neighborhood.
One block north, 7th Street's Restaurant Row continues to thrive, with new arrivals this quarter including H&H Brazilian Steakhouse and Le Grand. But perhaps the clearest indicator of the market's appeal is how the retail component of The Bloc is hitting its stride, with high-profile brands like Alamo Drafthouse Cinema choosing DTLA for its first Los Angeles location to tap into its cultural cache and desirable demographics., which you can see on the line out the door of Marugame Udon, and feel in the energy of the after-work crowd at JOEY DTLA – both newly opened at The Bloc this quarter.
While residential growth is undoubtedly reshaping DTLA, the large existing population of workers is still a big factor in the success of area retail. And a closer inspection of the crowds reveals another important dynamic in the Downtown market – the diversification of that working population. Where bankers and lawyers once dominated, creative folks in everything from tech to fashion now make up a large and influential part of the mix. Innovative new companies like TubeScience and Ghost Management – each of whom signed leases for over 100,000sf this quarter – are attracted by the cultural immediacy and relevance of Downtown, and most importantly, the dynamic, entrepreneurial mix of talent flocking to DTLA. Hot co-working leaders WeWork, NeueHouse, and CommonGrounds also expanded their Downtown presence in Q2, helping drive the seventh straight quarter of net absorption of Class A office space.
All these new businesses are betting on the future of Downtown LA, and while our Market Report paints a picture of DTLA today, it also provides a glimpse of tomorrow – the pipeline of projects, statistical trends, and emerging opportunities attracting so much interest and investment. Nowhere is that future brighter than atop Bunker Hill at the construction site of Related Companies' The Grand.
You can see the project's dramatic renderings and impressive specs – 39 story residential tower, 300 room Equinox Hotel, 176,000sf of retail and restaurant space, and a beautiful public plaza, all designed by famed architect Frank Gehry – in our Market Report. But to really grasp the importance and impact of this project, a bird's-eye view from Related's marketing suite 30 floors above the site – as we were treated to on our most recent DTLA Development Tour – provides a unique perspective. From that vantage point you get a sense not only of the project's scale, but how it will complete Grand Avenue, enliven Bunker Hill, and connect it to the Civic Center. Looking down to the west of the site, you can see another game-changing construction project – the Bunker Hill Metro Station of the Regional Connector – which will enable for the first time, a one-seat ride from multiple rail lines around the region directly to the largest employment center of Downtown LA.
Pondering this single project – one of the most ambitious developments in LA history – you could see how all of the pieces of Downtown's present – the growth of the residential population, the arrival of new companies, the thriving hospitality and tourism sector, the world-class arts & culture scene, and the rapidly expanding mass transit system – are coming together to shape DTLA's future. It's a story we never tire of telling, and showing, and we hope to continue to see you along the way.