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LOS ANGELES-”I have always felt that Downtown Los Angeles was cutting edge, leading edge and the place that could do whatever our imagination wanted it do. We play here, we work here and we have a community here.” So said Councilwoman Jan Perry, Ninth District, City of Los Angeles, during the 7th Annual Fall Downtown Los Angeles Program. The event, held at Downtown’s Club Nokia, was held by the Downtown Center Business Improvement District, and the purpose of the event is to “stay excited about downtown,” according to event moderator Hal Bastian, DCBID vice president and director of economic development.

Perry briefly spoke prior to the morning’s panel session, pointing to changes the area has undergone over the years, noting all the work that has taken place downtown and the impact it has had over the city. “All roads for economic development lead to Downtown,” she explained. “People realize that an investment in the core of our city is one of the best investments that you can make.”

There is a market waiting to be tapped, Perry continued. “Now is the time to plan for the next uptick in the economy. If you build it, they are definitely going to come.”

Each panelist gave a brief presentation prior to the group presentation. Steve Marcussen, an executive director with Cushman & Wakefield Inc., spoke on the office market, saying that it is one of the best markets in the country. “It is one of the most dynamic markets nationwide in that it is well occupied and filled with tenants large and small,” he said. “It is also the largest government center outside of DC.”

Marcussen continues that Downtown LA’s office space is supported by all of the amenities, keeping it “floating at the moment, and not really weakening much,” he said. “It is not suffering as much as many other markets across the country.”

What makes the market unique, Marcussen explained, is that the building quality is much better than other buildings built across the country, “which is great if you are a tenant looking to come downtown.” He added that another plus is that there are strong landlords downtown. As far as forecast, “the market is still very well occupied by credit worthy tenants and it doesn’t look like it is going to go down any further,” he said.

Next up was Alan Mark, president of the Mark Co., who spoke on the residential market. He explained that units sold are down 35%, but pointed out that it is a prime time for first time buyers. “One thing that has been pretty difficult is Fannie Mae and FHA,” he explained. “Jumbo loans are really hard to come by… and credit standards are overly stringent for buyers at the higher end of the market.”

Mark pointed to Downtown luxury green residences, Evo, as an example to show who is buying. Thirty percent of buyers are between 26 and 30 years old. More than 20% cited location as the reason for purchase. About 40% work downtown. Roughly 50% are first time buyers and almost 90% do not have children.

From the retail front, Derrick Moore, a first vice president at CB Richard Ellis Inc., said that when you look at Downtown about 10 years ago, the perception was that it was really just a daytime community, populated by a strong office population, but after 5 p.m., the town pretty much died. He explained that when you look today, you can see that it has changed tremendously.

The good news, Moore said, is that now is the time to jump in because the Downtown LA renaissance is stronger than ever. “You can’t be the prices here for retail …” He pointed out that in 2005 and 2006, retailers were competing for spaces and rates crept up, but the prices are now 30% to 50% off. “Downtown is on sale,” he said, “and you still have a neighborhood still in need of services.”

Following Moore’s presentation, Richard Plummer, an executive vice president at Grubb & Ellis Co., touched on Downtown’s investment market, noting that it is a great place to invest. From the peak in the early 2007 to today, building values have dropped about 40% to 50%, he said, primarily because of the rise in cap rates and to a lesser degree, the rise of cash flows. Financing is very difficult today, with major loans just barely starting to appear, he explained. “We are now seeing the life companies return to that slowly, which is a good sign.”

Plummer pointed to catch phrases such as “pretend, extend, don’t spend…” or “pray and delay,” but explained that his favorite phrase these days is “a rolling loan gathers no loss.” He explained that until financing gets going, there will not be a lot of investment sales going on. “Once Wall Street decides once financial instrument they want to use, things will start to happen,” Plummer said, “but it will still take some time.”

Tammy Billings, marketing director for event campus LA Live, briefly spoke on the 650 events per year that area accommodates, on the hotel rooms being built to encourage more people to stay downtown, and on the unique spaces that can accommodate five to 20,000 people. During the panel discussion, Billings noted that the event campus has also created a residential discount program and encourages those that live in the neighborhood to participate.

During the panel discussion, moderator Bastian asked Moore what’s next on the horizon for 7th street. Moore mentioned that Walgreens has stepped up and done a multi-year lease downtown. “Walgreens usually takes 12,000 square feet,” he said, “but they took 16,000 square feet in a building that does not have parking … which says something about the pedestrian traffic downtown.” He added that he is seeing interest from fashion retailers as well, and truly believes that 7th street will be populated by retailers that are not in the food business.

Plummer explained that “we thought the special servicers would come in and start to take back the properties, stabilize them briefly and then start to list them.” He added that because the occupancy rates Downtown are fairly healthy, “we are going to see less distressed downtown. I think they will be more in the suburbs of downtown. I am pretty optimistic.”

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