Is DTLA Passing Its “Prove It” Years?
With several projects hitting the market, 2017 and 2018 were considered “prove it” years for Downtown Los Angeles, and the market is taking the new supply in stride.
“This year and last have been considered ‘prove it’ years for the DTLA multifamily industry because of the record number of apartments and condos that were set to deliver in such a short timespan—especially in 2017—during which there was a record 2,831,” Carol Schatz, president and CEO of the DCBID, tells GlobeSt.com. “These residential deliveries come after having already delivered and filled more than 8,700 units over the prior five years – an average of approximately 1,750 per year. There were those in the industry who questioned the depth of demand and its ability to keep pace. But with occupancy levels once again nearing 93%, DTLA has more than answered the question.”
The market’s strong performance during these years illustrates its strength and momentum. While Schatz says hesitated to make any future predictions, she says that the activity has far exceeded expectations. “While the numbers in the market report answer that question definitively, we’ve long since abandoned trying to set expectations or predict what can be achieved,” she says. “The renaissance has far exceeded our wildest hopes and dreams, and if you poll the developers themselves, you will find that DTLA’s performance has exceeded even their expectations. That’s saying something.”
The strong absorption will only mean one thing—more development. As demand continues to meet supply, developers are continuing to fill the construction pipeline for apartment projects. “If you track the number of new projects proposed and entering the pipeline as we do, you can see that the development community is bullish on continued growth and is making the investments to make it happen,” explains Schatz.
Multifamily is a crucial element to creating a dense urban community, but it is also essential in spurring growth in other asset classes. This activity has helped to bring more retailers and companies to the market. “If you take a quick look at the numbers from the other markets in DTLA, all of which are growing, and then consider what the multifamily industry has accomplished to date, you can see the renaissance is now building upon itself,” says Schatz. “People want to live here, so more companies who want access to the talent pool are opening offices and expanding. With the expanding workforce and residential populations, retail, restaurants and nightlife are moving in. All of these people and amenities bring more visitors, which is driving DTLA’s booming hospitality industry. When looking at DTLA and the renaissance in this context, we see continued growth for the foreseeable future.”