High Office Price Tags Are Keeping Investors Out of DTLA

The high pricing on office product is keeping some investors out of the Downtown Los Angeles market, because the leasing activity and rental rate growth doesn’t justify the property values. Harbor Associates is among them. The firm recently partnered with Bascom Group to purchase $500 million worth of office product in Western US markets in the next two years, but says that Downtown Los Angeles is not among its target markets.

“It seems like Downtown Los Angeles is slow,” Paul Miszkowicz, a principal at Harbor Associates, tells GlobeSt.com. “There is a lot of momentum and a lot of hype in the market, especially in the Arts District, and it seems like people really want the office market to be better than it is. It hasn’t moved in the way that people have thought it would.”

While they are buyers in Downtown Los Angeles, Harbor is a big believer in the market, and they would be open to opportunities—for the right price. “That is a challenge,” admits Miszkowicz. “At the prices we are seeing today, we would not buy in Downtown Los Angeles. The amount of leasing activity and the economic patterns haven’t supported a lot of the values that are out there, at least not yet.”