Downtown LA picked up in 2017 right where it left off, with all sectors showing continued strength. Rents were up across the board, with positive net absorption in office and retail, and consistent occupancy rates in residential, despite a steady stream of new property openings quarter after quarter.
Q1 saw the first new condo tower open since the recession, with strong sales at Trumark's Ten50 and Greenland USA's Metropolis, which opens in Q2. With the leasing market healthy as well, developers expressed continued confidence in the market by proposing 3,800 new residential units in Q1.
It was another solid quarter of office leasing as well, highlighted by Soylent's 29,000 SF deal at the AT MATEO project and several new leases at the soon to open Wilshire Grand. Rising Realty agreed to purchase One Cal for $460 million, the largest acquisition yet for the local developer, who also started work on their revitalization of the historic Title Insurance Building.
The biggest retail news was Nordstrom Rack's announcement of their first store in DTLA, taking 27,000 SF at Brookfield's FIGat7th. Progress continued at The BLOC with the completion of the tunnel connecting it to the 7th/Metro Center rail station and the opening of fast-casual eatery Everytable, complementing more than a dozen new retail and restaurant openings across the Downtown market.
The new Hotel Indigo opened its doors at Metropolis, the first of almost 2,000 new rooms that will be added in 2017. Across from the Convention Center, TriCal announced plans to redevelop City Lights on Fig into a 1,000+ room hotel, which would be the second such project on that corner.
After much anticipation, Exposition Park was chosen as the future home of the $1 Billion George Lucas Museum of Narrative Art. On a smaller scale, but of great historical significance, the City of LA announced that Angel's Flight, the funicular connecting Bunker Hill and the Historic Core, will be rehabilitated and is expected to re-open on Labor Day.
Q4 Market Report Highlights:
- 16.5% Office Vacancy; 4.1% decrease YOY
- $3.40 PSF Class-A Lease Rate; 5.6% increase YOY
- 535,190 SF YTD Leasing Activity
- 2M SF Under Construction + 2.4M SF Proposed
- $2.63 PSF Lease Rate; 3.5% increase YOY
- 109,34 SF YTD Net Absorption
- 77.4% YTD Occupancy Rate; .65% increase YOY
- $215.80 YTD Average Daily Rate; .50% increase YOY
- $166.95 YTD Average RevPAR; held steady YOY
- 89.8% Occupancy rate for Apartments; held steady YOY
- $2.80 PSF Average for Apartments; 3.3% increase YOY
- $2,573 Average Effective Rent per Unit: 2.0% increase YOY