Downtown's positive momentum continued into the second quarter of 2016, highlighted by the long awaited opening of the Expo Line extension, connecting Santa Monica to Downtown LA for the first time since 1953, and symbolizing the re-emergence of DTLA as a destination.
As expected, apartment occupancy rates declined slightly due to the increased volume of new inventory, including the Hanover Olympic and Wakaba LA, which opened this quarter. Rents were unchanged from Q1 after rising 8% over the past year and 31% over the past three years.
Office vacancy rates continued to fall, dropping below 17%, with average rents up over 9%. Notable new tenants include Russell Simmons' All Def Digital, relocating from Culver City to South Park, and Hollywood-based co-working firm IgnitedSpaces, who leased 42K square feet at the California Market Center.
Downtown's growing appeal to tourists and business travelers pushed hotel "revenue per room" up almost 20% since last year. Capitalizing on that strength, The Sydell Group made steady progress on their Freehand Hostel, and began renovations on the Nomad Hotel at Giannini Place.
The DTLA retail explosion continued with new fashion offerings such as BNKR, Pocket Square Clothing, and Guerilla Atelier, and food like Miro, Mast Brothers Chocolate, and 85°C Bakery. Foodies got another gift with the launch of the weekly "Smorgasburg" at ROW DTLA, a food and shopping festival with over 100 vendors. The retail vacancy rate continued its downward trajectory, ending the quarter at 4%.
In addition to the opening of the Expo Line, Downtowners got their first glimpse at the future of two major park projects with the announcement of design competition winners for Pershing Square (Agence Ter) and First and Broadway Park (Mia Lehrer+Associates). On a smaller scale, DTLA opened a new community garden at 220 S. Spring Street.
Highlights by Sector:
- 79.2% YTD Occupancy Rate; 8.6% increase YOY
- $212.19 YTD Average Daily Rate; 9.8% increase YOY
- $167.98 YTD Average RevPAR; 19.2% increase YOY
- 90.3% Occupancy rate for Apartments
- $2.79 PSF Average for Apartments; 8.1% increase YOY
- $2,581 Average Effective Rent per Unit: 7.9% increase YOY
- 16.9% Office Vacancy; 4.0% decrease YOY*
- $3.29 PSF Class A Lease Rate in Q1; 9.3% increase YOY*
- 214,134 SF of Positive Net Absorption*
- 4.0% Vacancy Rate: 25.9% decrease YOY
- $2.54 PSF Lease Rate; 1.6% decrease YOY