LOS ANGELES | Downtown Project Rundown 6.0

[citywatch]

I wonder how much of a profit margin devlprs of apts or condos in dtla have? The angel's Landing proj just posted some vids about their inclusion of affordable housing...looks like devlprs such as Macfarland have to jump through a lot of hoops in order to make their devlpmt pencil out.

They say each unit will cost them $1,000,000 to build. Even if that could be rented at mkt rate, they'd still have to charge $83,333 per month for a yr to cover that cost. If they spread it out over 10 yrs, they'd have to charge over $8,000 a month. If they tried to cover their costs over 20 years, they'd still have to charge over $4,000 a month. And that doesn't include any interest they'll have to pay & also any profit they'd want to make. My math may be wrong, however, or I'm possibly exaggerating the difficult of financing & its affect on their bottom line.

But if the proj is difficult to pencil out, that could be the reason that equity residential of chicago, which was also required to include affordable housing, decided to cancel their apt tower across the street....no less above an MTA subway station too.

https://youtu.be/07BCi3u1ld

https://youtu.be/OyOy1ZQJeBs


• Video Link

^ It's still good to see the ppl behind Angel's Landing actively working on the devlpt, just as it was good to see a few months ago the ppl behind the Olympia proj between 9th St & Olympic, east of Fig & right next to the 110 fwy still pursuing their proj. But both projs seem to be facing hurdles from LA city hall.

[zonedgreg]

You're going down the right path on your thinking, but take into account the programming of Angel's landing.

180 for sale condos - which, if sold pre-construction or in a relatively short time after construction is complete, that's instant return of large amounts of capital back to investors.

two hotels totaling 515 keys with ballrooms and conference space.. You usually get the biggest bang for your buck with hotels. You may ask, "then why aren't they developed all the time en masse?" and it's usually because of the uncertainty of cash flow around essentially 1-night leases if you think about it. But if it pans out, high quality hotels generally generate bigger return than other uses - the ballrooms/conference space helps too

72k sf of retail / restaurants - also generally a higher return on your capital than apartments given the lower costs to construct retail suites, NNN recoveries and depending on the tenant/location/demand, base rent lease rates can just generally be higher than base rent for apartments

750 parking stalls - you think those are free?? Look at underground DTLA daily parking rates.

Condo and apartment tenants also will be charged for things like having pets, parking spaces as stated, there may be some amenity charges, the landlord may get revenue from onsite car wash in the garage, special events / other income, common area utility bill backs to tenants, etc. - these extra categories don't sound like much but they can add up.

Additionally, Macfarlane may be getting some sort of city incentives that lower development costs or lower incremental taxes over time in exchange for the affordable housing. not sure about that one..

All of these things help "subsidize" the apartments so you may not actually need to charge the exorbitant rates you're stating in order to actually make good money on the project. If you can fill up the towers with the exorbitant rates, then great! But if not, then every developer shop runs a million underwriting models to come up with worst case scenarios.

lastly, it also depends on your holding period. If you're really just a merchant developer and are looking to sell upon leasing out/stabilizing the property, then yeah you're going to lease at the highest rate possible and settle for nothing less. But I bet Macfarlane is a buy and hold type - just looking for good cash on cash / equity return, reshuffle the capital stack post-stabilization and get some other partners out of there, and see what happens. That gives them long term. flexibility.

[citywatch]

bisnow.com

Downtown LA, like most downtowns across the country, is at a turning point as people rethink the ebb and flow of their daily lives. To better understand the future of this rapidly changing area, the Downtown Center Business Improvement District, an organization that has been at the forefront of DTLA’s renaissance over the past 20 years, is releasing its 2023 DTLA Outlook Insights report.

DCBID Executive Director Nick Griffin told Bisnow the report is arriving at a critical moment. As coronavirus states of emergency lift, post-pandemic realities continue to emerge, colored by change and uncertainty — particularly for central business districts that have been upended by significant shifts in the nature of office work and the interrelated effects the pandemic has had across all sectors. “To understand DTLA, particularly in this current moment, you need to know it is no longer just a 9-to-5 business district,” Griffin said. “It’s a 24/7 mixed-use area with a residential population of over 90,000 people, making it one of the largest residential neighborhoods in the city.”

Griffin said DTLA now welcomes more than 17.4 million visitors every year due to its vibrant cultural and nightlife scenes.

The DCBID’s quarterly market statistics show some sectors of Downtown’s economy recovering well — with residential occupancy topping pre-pandemic levels and hospitality nearing them. Overall visitation numbers clearly show people returning to DTLA.

On the residential front, there’s new inventory under construction and in the pipeline to meet strong demand as the residential population grows.

“That population is increasingly shaping DTLA’s identity, and it was critical to weathering the pandemic in the absence of our normally huge population of office workers,” Griffin said.

He added that he was pleasantly surprised at how quickly DTLA’s hospitality sector recovered. He said that occupancy and revenue per available room were close to pre-Covid levels and food and beverage are performing particularly well, with over 30 new restaurant openings in the last year. The exception, of course, is the office sector, where uncertainty around the shifting nature of hybrid and remote office work and what those changes might mean for Downtown’s vitality is the top concern. But while the office market has been slower to recover, the report also shows there is reason for hope with 81% of office workers saying their employers have expressed plans for them to be in the office at least half the workweek.

In counterpoint to the market stats in this report are the survey results of 2,000-plus respondents, which, when compared to the halcyon days before the pandemic, present a significantly reduced sense of optimism about the future. Whether on general questions about Downtown’s direction or specific ones regarding issues such as public safety, the responses express concern and frustration at what seem to be intractable problems and a perceived lack of progress in addressing them.

Griffin said he hopes that the survey will be a call to action to DTLA’s civic and community leaders to help produce more tangible results to combat these issues and produce positive results.

Griffin said his marketing team has developed new initiatives to promote local businesses, such DTLA Coffee Trail, Food Hall Favorites and Holiday Scavenger Hunts. To help entice office workers back Downtown, it has also supported big events like the Pershing Square Ice Rink with special lunchtime skating sessions. This has increased engagement and created a more fun and lively downtown for workers, residents and visitors, he said.

.

[SoCalKid]

Originally Posted by citywatch

I wonder how much of a profit margin devlprs of apts or condos in dtla have? The angel's Landing proj just posted some vids about their inclusion of affordable housing...looks like devlprs such as Macfarland have to jump through a lot of hoops in order to make their devlpmt pencil out.

They say each unit will cost them $1,000,000 to build. Even if that could be rented at mkt rate, they'd still have to charge $83,333 per month for a yr to cover that cost. If they spread it out over 10 yrs, they'd have to charge over $8,000 a month. If they tried to cover their costs over 20 years, they'd still have to charge over $4,000 a month. And that doesn't include any interest they'll have to pay & also any profit they'd want to make. My math may be wrong, however, or I'm possibly exaggerating the difficult of financing & its affect on their bottom line.

But if the proj is difficult to pencil out, that could be the reason that equity residential of chicago, which was also required to include affordable housing, decided to cancel their apt tower across the street....no less above an MTA subway station too.

[URL="https://youtu.be/07BCi3u1ld"]https://youtu.be/07BCi3u1ld

You're on the right path here, but let me break this down as a development/deal person at a large development company you've heard of.

First of all, most people don't understand this, but aside from REITs (Avalon Bay, Essex, Camden, Equity Residential, etc.), developers don't use their own money to build projects, as they don't have that money. They go out looking for equity investors and then "co-invest" some percentage of the equity needed (5%-20%, skewing towards the low end depending on the development/developer). They then, together with their equity investor, secure a construction loan. So in order to get a project off the ground, you need to attract an equity investor.

In today's market, most equity investors are looking for a 5.5% "yield" or "return on cost" for multifamily construction, defined as the net operating income (all revenue less all expenses except for interest) divided by total costs to build the project. So let's take a $100 million, 182 unit, 7 story apartment project (that's around $550,000/unit in total costs, which is where the market is today for 7 story podium development). In order for that project to get the necessary "yield", the net operating income needed to satisfy investors would be $5.5 million. The profit margin (net operating income divided by revenue) for most big apartment projects is around 65%. So to get that $5.5 million in net operating income, you need around $8.5 million in revenue. So in order to make the project attractive to investors, each unit needs to produce around $46,500 in revenue per year, or $3,875 per month. Layering on top of that, you need to either build affordable units or pay big "linkage fees" in Los Angeles. Since the rent on affordable units is very low, the rest of the units need to charge more in order to average $3,875/month. So at the end of the day, you need $4,000 in monthly rent to attract investors! That's a big rent number that's difficult to get in most places in the city, which shows why it's tough to get things built right now.

Now a high rise costs WAY more to build - that $1 million per unit in costs quote is generally in line with what I'm hearing these days. In order to make that work, you need $6k-$7k in rent, which is obviously impossible to get in most areas of the city today.

Before interest rates went up, investors generally only needed a 5% "yield" or "return on cost", and construction costs used to be much lower. Combined, those things made the math a little easier so you didn't need as high of a rent (maybe $3k in rent instead of $4k for a 7 story project), but it was still difficult.

All of the above is why it's so important for the city to:

- OVERTURN MEAURE ULA or create an exception for new developments. Investors need a higher "yield" when they are taxed so much on the sale of their investment, which makes the math above way way harder. I recently learned that City Council has the power to amend the law, so they could make that exception if they wanted. Call your city council member!

- Make it easier and quicker to build, which decreases costs. That mean allowing for "administrative" approvals which require no votes or hearings. It also means making all the city departments (building and safety, fire, water and power, transportation, etc) that review construction drawings more accountable - you'd be shocked by the trouble we have getting through their reviews even though we're following all of the rules.

- Rezone to make more parcels available for development. This makes it easier to find sites and brings down the cost of development land.

- Reduce fees, public benefits, and all other burdens that are placed on projects. Prevailing wage and/or union requirements are also a huge deal killer that add tons of costs.

- This one may be a long shot, but reform our building code to make it cheaper to build. Our building code is way more extensive and onerous than what you see in places like Canada, and it drives up the cost by a huge amount.

Ok sorry, my rant is over!

[nmkef]

I think a good portion of your latter points are covered by DTLA2040 yea? A shame it's been in limbo for years on end.

Unrelated - the next oceanwide holdings annual report comes out tomorrow. Doubt we'll see anything interesting but maybe some indication of some direction?

[craigs]

Looks like the pot of gold is somewhere in or around Paul Hastings Tower! From LA Reddit:

[colemonkee]

Nice shot of the Weingart Center there poking up in the foreground.

[LosAngelesSportsFan]

Originally Posted by SoCalKid

You're on the right path here, but let me break this down as a development/deal person at a large development company you've heard of.

First of all, most people don't understand this, but aside from REITs (Avalon Bay, Essex, Camden, Equity Residential, etc.), developers don't use their own money to build projects, as they don't have that money. They go out looking for equity investors and then "co-invest" some percentage of the equity needed (5%-20%, skewing towards the low end depending on the development/developer). They then, together with their equity investor, secure a construction loan. So in order to get a project off the ground, you need to attract an equity investor.

In today's market, most equity investors are looking for a 5.5% "yield" or "return on cost" for multifamily construction, defined as the net operating income (all revenue less all expenses except for interest) divided by total costs to build the project. So let's take a $100 million, 182 unit, 7 story apartment project (that's around $550,000/unit in total costs, which is where the market is today for 7 story podium development). In order for that project to get the necessary "yield", the net operating income needed to satisfy investors would be $5.5 million. The profit margin (net operating income divided by revenue) for most big apartment projects is around 65%. So to get that $5.5 million in net operating income, you need around $8.5 million in revenue. So in order to make the project attractive to investors, each unit needs to produce around $46,500 in revenue per year, or $3,875 per month. Layering on top of that, you need to either build affordable units or pay big "linkage fees" in Los Angeles. Since the rent on affordable units is very low, the rest of the units need to charge more in order to average $3,875/month. So at the end of the day, you need $4,000 in monthly rent to attract investors! That's a big rent number that's difficult to get in most places in the city, which shows why it's tough to get things built right now.

Now a high rise costs WAY more to build - that $1 million per unit in costs quote is generally in line with what I'm hearing these days. In order to make that work, you need $6k-$7k in rent, which is obviously impossible to get in most areas of the city today.

Before interest rates went up, investors generally only needed a 5% "yield" or "return on cost", and construction costs used to be much lower. Combined, those things made the math a little easier so you didn't need as high of a rent (maybe $3k in rent instead of $4k for a 7 story project), but it was still difficult.

All of the above is why it's so important for the city to:

- OVERTURN MEAURE ULA or create an exception for new developments. Investors need a higher "yield" when they are taxed so much on the sale of their investment, which makes the math above way way harder. I recently learned that City Council has the power to amend the law, so they could make that exception if they wanted. Call your city council member!

- Make it easier and quicker to build, which decreases costs. That mean allowing for "administrative" approvals which require no votes or hearings. It also means making all the city departments (building and safety, fire, water and power, transportation, etc) that review construction drawings more accountable - you'd be shocked by the trouble we have getting through their reviews even though we're following all of the rules.

- Rezone to make more parcels available for development. This makes it easier to find sites and brings down the cost of development land.

- Reduce fees, public benefits, and all other burdens that are placed on projects. Prevailing wage and/or union requirements are also a huge deal killer that add tons of costs.

- This one may be a long shot, but reform our building code to make it cheaper to build. Our building code is way more extensive and onerous than what you see in places like Canada, and it drives up the cost by a huge amount.

Ok sorry, my rant is over!

Awesome info! It's good for the general public to learn these things

[Steve8263]

Agreed, amazing info, thank you for sharing.
Of course none of this was spelled out before people voted on the "mansion tax".
The absurdity of ULA is of course it will drive up rents for everyone and likely end up helping nobody....

[ChelseaFC]

Originally Posted by Steve8263

Of course none of this was spelled out before people voted on the "mansion tax".
The absurdity of ULA is of course it will drive up rents for everyone and likely end up helping nobody....

I mean, we all know anything that involves the thought of sticking it to the rich was sure to stir LA voters into a frenzy. Sadly most people vote without being truly informed. So people have no one to blame but themselves. Well done to the 42% no-voters who actually thought it through before casting a vote.

[LAsam]

Originally Posted by SoCalKid

Ok sorry, my rant is over!

Solid explanation. Thanks for taking the time to post that.

[nmkef]

Originally Posted by nmkef

I think a good portion of your latter points are covered by DTLA2040 yea? A shame it's been in limbo for years on end.

Unrelated - the next oceanwide holdings annual report comes out tomorrow. Doubt we'll see anything interesting but maybe some indication of some direction?

As expected, NSTR

As of the
date of this announcement, the Group is still negotiating with the potential purchaser
in respect of the terms of the sale and purchase agreement and no definitive
agreement has been signed yet. The Group and will make announcement as and
when appropriate in accordance with the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (the “Listing Rules”). It is expected the
financial difficulties of the Group can be resolved by the end of 2023.

[citywatch]

per some posts above, such as about taxes & city govnt, the culture & political scene in dtla...in LA in general...may be suffering from a version of the stockholm or battered wife syndrome. Or where a situation is increasingly so volatile, that ppl soon grasp for any straws or good news they can find.

Unlike some ppl at SSP, etc, I don't know if Bass really has enough interest in or commitment to the issue of dtla. Even Garcetti seemed to show some positive awareness of things like new devlpt in LA, such as the museum in Expo pk or improvements to LAX. But, as in most cases, the new boss often will be same as the old boss.

Real estate executives share advice for Mayor Karen Bass on revitalizing downtown L.A.

On a panel about the future of downtown Los Angeles on Tuesday, real estate executives shared their advice for Mayor Karen Bass on how she can support the revitalization of DTLA.

At the Bisnow event, Murray McQueen, president of Tribune Real Estate Holdings, said he thinks Bass is off to a great start, noting the new mayor’s state of emergency with the homelessness crisis, removing encampments near parks and schools. As far as advice, McQueen said Bass should continue to make bold moves.

“The mayor in L.A. is not a particularly powerful position like it is in other cities, so she’s handcuffed a bit,” he said. “But making bold moves and taking action like she came out of the gate doing I think is key.”

Justin Weiss, vice president at Kennedy Wilson Brokerage, had three key ideas. First, he said, Bass should bolster her connections to building owners and developers through the planning department, namely to conceive a new commercial reuse ordinance as the conversation around office to residential conversions continues.

As more underutilized buildings are being eyed for residential redevelopment, Weiss also said Bass should call public employees back to the office so developers can have face-to-face conversations across city departments to incur increased utilization downtown. And Weiss made a point about what he sees as a decreased police presence downtown, advising Bass to up the number of officers in the city.

“We’re down about 140 police officers on the streets in downtown L.A.,” he said. “We’re supposed to have, I believe, more than 400. We’re in the low 300s. We need that to be changed immediately.” He added that a larger police presence will make visitors to DTLA “more comfortable walking a few blocks to be able to go to a restaurant.”

In an open letter about public safety in L.A., Bass, who advocates for police reform, proposed tools contrary to the idea of increased policing as a solution to crime and violence across the city, instead focusing on “effective and responsive policing, preventing homicides and getting guns off our streets.”

Wrapping up the panel, Stephane Lacroix, general manager of the Downtown Los Angeles Proper Hotel, said he sees downtown as “an open book.”

“Coming to downtown, I feel there’s a very different dynamic,” he said. “It’s more collaborative. There’s a lot of interest in discussing, collaborating, partnering, connecting the dots, in a way I did not see in Beverly Hills or Bel Air. I feel it’s quite resilient. There’s an amazing, positive outlook, and there’s a strong desire to win as a community, which I believe is a key to success.”

commercialobserver.com

Facing the larger troubles engulfing the office market, KBS sold the Union Bank Plaza tower in Downtown Los Angeles for a big discount to the Schreiber-run Waterbridge Capital after several rounds of descending bids, Commercial Observer has learned.

The 40-story, 701,888-square-foot office building sold for between $105 million and $110 million, according to sources familiar with the deal. KBS REIT acquired the same building from Hines for $208 million in 2010, records show, and also completed a $20 million renovation. Schreiber did not immediately return a request for comment. A previous deal with Schreiber was set to close in October for $155 million, according to reports.

Union Bank Plaza was completed in 1967 at 445 South Figueroa Street in the Bunker Hill area, and was the first skyscraper in L.A. to be designated as a Historic-Cultural Monument. Union Bank renewed its lease for some 162,000 square feet in 2019, but that was significantly smaller than the 300,000 square feet it leased there prior to that deal.

To make matters worse and put more pressure on a potential sale, L.A.’s Measure ULA goes into effect April 1, which will increase transfer taxes by 5.5 percent on transactions over $10 million.

^ the so called mansion tax apparently will also affect the various 'mansions' in dtla. As for 'descending'...
.

[LAsam]

^ $228 million cost basis and sold for less than $110 million? Not a good time to be selling offices downtown. My guess would be that it was a short sale.

[craigs]

L.A. County continued to lose population even as other areas grew, data shows

Terry Castleman, Nathan Solis
Los Angeles Times
March 31, 2023

Los Angeles County was one of the urban areas that was hit hardest by significant population drops at the beginning of the pandemic.

But while some other urban counties began to rebound in 2021-22 with rising population numbers, Los Angeles County continued to lose people, new data show.

According to a new census report, more than two-thirds of America’s largest counties — those with more than 100,000 people — saw population gains from July 2021 to July 2022.

Los Angeles County lost 90,704 people during that period, one of several big California counties to see a population drop.

Still, the L.A. County declines marked an improvement from the 2020-2021 period, when the county lost 180,394 people.

Demographic experts stressed that the data reflect movements of the population when COVID-19 was still a major concern — and that it is possible Los Angeles County’s population could be starting to rebound, and that numbers from 2022-23 will bear that out.

Remote work has allowed people in many parts of the country to move out of cities to less expensive areas. It still remains unclear how many of those who left L.A. will eventually move back. And some state officials have argued the trends suggest that the “California exodus” is ebbing.

Los Angeles County has a “continuous inflow and outflow of population,” but the pandemic disrupted that, said Dowell Myers, a professor of policy, planning and demography at USC.

“The next year’s data will tell us much more about the recovery from the pandemic,” he said.

During the pandemic in L.A. County, “everybody moved kind of outward a notch,” Myers said. “Or way out to Palm Springs.”

A worker who needs to go into the city only once a week can afford to commute for several hours, he added, much like the way people commute into New York City from the suburbs.

There are clear indications that Los Angeles has experienced some pandemic recovery over the last year — including growing gridlock on freeways, crowded airports and the return to on-site work in more sectors of the economy.

But office occupancy in L.A. remains a concern — especially in some areas such as downtown Los Angeles. And many remained squeezed by high rents and home values.

The Los Angeles County losses were largely due to net domestic out-migration — the difference between the number of people who move in and those who move out. Between 2021 and 2022, 142,953 more people left Los Angeles County than moved there, according to census numbers.

That’s down from the previous year, when domestic out-migration was 194,804 people.

Migration out of the county has increased, with cost-of living increases and the rise of working from home likely to blame. Immigration has decreased due in part to federal policies and pandemic restrictions. The overall effect is a drop in population without as much impact from the usual mitigating factors of immigration and natural increase — or births outpacing deaths.

It is important to note that Los Angeles County — still the most populous in the nation at more than 9.7 million people — is not a leader in population loss on a percentage basis. Those tended to be smaller counties.

California’s Lassen County holds the dubious honor of national leader based on percentage, with 6% of the rural county’s population departing from July 2021 to July 2022, putting the county’s population at 29,904.

On the opposite side of the nation, New York County, which had a greater percentage loss than any county from July 2020 to July 2021, rebounded in 2022, gaining 17,472 people. After having net domestic out-migration of 98,566 in the first year of the two-year census survey referenced in the study, the county saw positive domestic migration in the more recent year.

San Francisco County saw a domestic out-migration of 9,421 people in 2022, compared with 57,611 the year before.

California’s Santa Clara and Alameda counties also continued to see population loss in 2021-22, each losing around 15,000 people.

Nationally, populations are shifting to the Southwest. Only 50 of the country’s most populous counties were in the South and West in 1980. By 2010, that number was 58.

Now, 63 of the country’s 100 most populous counties are in those regions. Much of California, however, has been left out of the growth.

Also of interest to demographers is a decline in birthrates. In 2022, nearly three-fourths of America’s counties reported more deaths than births.

Data from the California Department of Finance show that births exceeded deaths by about 20,000 in Los Angeles County between July 1, 2021, and July 1, 2022.

“This is a worldwide phenomenon that’s not unique to California,” Richard Green, director of the USC Lusk Center for Real Estate, said on the decline in birthrates. “We are starting to develop evidence that housing has something to do with it. As housing gets more expensive, you see people less likely to leave the paternal or maternal home, the family home.”

This can feed into income inequality, because households with married couples tend to make more money, which is particularly an issue in California, where housing costs can be nearly unaffordable for a single person.

“We need to build housing. We don’t have places for people,” Green said about the declining birthrate. “That’s one of the things that’s driving this performance.”

Declining population is not just a numbers game — it can have real economic consequences, according to experts. To power our economy, Myers said, “we need those workers and we need their kids.”

[craigs]

Classic downtown skyline shot, from LA Reddit.

[citywatch]

some good news, some bad news. First the good news...

Robert Gauthier / Los Angeles Times

A high-rise with two hotels and an over-the-top restaurant and bar scene is set to open this month by Crypto.com Arena in downtown Los Angeles as travelers embrace the road again and the hospitality business climbs out of the crater it sunk into during the pandemic. Marriott put multiple brands in downtown L.A. to serve a range of reasons people travel such as leisure, business and conferences, said Chief Executive Anthony Capuano. The hostelries are part of billions of dollars of development that has transformed the once-blighted South Park neighborhood, starting with the completion of then-Staples Center in 1999 and followed by the L.A. Live hotel, office and entertainment center in 2007 that anchored a wave of investment.

“The L.A. Live complex transformed the urban core of the city,” said Capuano, who had a key role in putting Marriott hotels there. “Downtown used to be pretty sleepy after about 5 p.m.”

“We want neighbors too,” he said, so “guests can experience the city they are in” and not just meet fellow travelers. About half the people hanging out or working in the lobby of a Moxy in New York are not staying there, he said.

The attention-grabbing attraction for travelers and locals alike will be Level 8, a spread of eating and drinking venues that cover the entire eighth floor of both hotels — the Moxy and AC are stacked vertically side-by-side in a 37-story tower designed by architecture firm Gensler. The exterior is clad in a 15,000-square-foot electronic billboard, one of the largest in the West capable of projecting a 3-D effect.

Prolific L.A. bar and restaurant operators Mark and Jonnie Houston, known for creating playful and theatrical settings to eat and drink, are trying on Level 8 to notch a new high in the zaniness and rakish decadence they are known for. “We have never tackled anything of this magnitude,” Jonnie Houston said of Level 8, which will span 30,000 square feet and have eight distinct venues including dining, cocktail bars, a pool deck and a nightclub.

Japanese-inspired restaurant Lucky Mizu will be centered around and under an “earth harp,” a giant musical instrument with strings that stretch over the audience. Guests will cook traditional hot pot cuisine and steamed seiro mushi entrees at their tables. Another will serve Japanese teppanyaki, where chefs cook flamboyantly on huge griddles. Masked Mexican-style wrestlers will perform in a ring at Sinners y Santos. A speakeasy bar will be entered through what appears to be an old cathedral. The pool deck is expected to have a Miami flavor capped with an outdoor bar under a rotating carousel.

Mark Houston said he got goose bumps looking up at the “massive” spinning carousel on the corner of Figueroa and Pico. Perhaps, he said, “It made me feel like how Walt Disney probably felt seeing Disneyland being built.”

It’s been a hard slog, though, to meet all the safety, health and design requirements of building complicated bars and restaurants far above the street. “I realized why high-rises are so cookie cutter,” Mark Houston said. “It’s because you deal with so many hurdles that everyone just gives up.”

It will take longer to complete Level 8 than the Moxy and AC, which are set to open April 12. The Houstons’ complex should be open by the end of June.
If the result is as hoped, the Houstons will oversee an attraction that will inspire return visits because, he said, “You can’t do it all in one night.”

Ideally for the Houstons and hoteliers, Southern California residents might even decide to turn downtown visits into staycations that last a couple of nights because they are entertained, he said. For many, “Your hotel has to be Instagrammable,” he said. “People pick a place to honeymoon or have a vacation or staycation because it’s Instagrammable.”

The hotel business has seen a substantial recovery since the depths of the pandemic in 2020, industry consultant Alan Reay of Atlas Hospitality said. Leading the way have been travelers eager to kick back at airy resorts. Average hotel occupancy in downtown L.A. last year was 71%, a solid rise from 60% in 2021, Reay said. The average price of renting a room went from $210 per night to $265. Rooms at the Moxy will start at $199 and a night at the AC will begin at $219.

Los Angeles is experiencing the eighth-slowest recovery of all major markets in the United States in terms of gross operating profit per available room, according to a report by the American Hotel & Lodging Assn.

“There are some challenges that need to be overcome around homelessness and crime,” he said. “We want to be part of those solutions” in part by working with the mayor’s office, Los Angeles Tourism and Convention Board and other civic leaders.

the following problem regrettably dates back well before the pandemic...a daily reminder that since the pace of improving dtla....going back over 60 to 70 yrs...hasn't been fast enough, it has come out on the short end. If dtla was originally more attractive, similar to older areas like pasadena or samo, it probably wouldn't have struggled as much. Ppl, money & businesses started dropping out of dtla as long ago as the 1920s, if not earlier.

L.A.’s office availability rate — which is the sum of vacant, soon-to-be-vacant and subleasable space — is now up to 26.2 percent, the highest ever reported. That rate is up to about 30 percent in Downtown L.A. This comes after another 1.3 million square feet of sublease space was added to the market the past year, bringing the total to about 10.4 million square feet.

L.A. is facing a “wall of office maturities on the horizon” with more than 7 percent of the metro’s office stock currently subject to a maturing loan this year, and 21.5 percent of its stock facing maturing loans over the next three years. Brookfield’s default on $784 million in loans on two office towers downtown hints at what’s next for office owners. To make matters worse for troubled owners and investors, L.A.’s Measure ULA went into effect April 1, which increased transfer taxes by 5.5 percent on transactions over $10 million.

The state government is also trying to cut 1.2 million square feet in office leases it has throughout California, and the national tech and media reset has continued, causing most of the major companies that drove L.A.’s office market in the past to shrink their footprints and cut down their corporate labor forces.

[ChelseaFC]

Moxy and AC Hotels to open April 12, 30k sq ft bar/restaurant complex to open by end of June

https://www.latimes.com/california/s...wn-los-angeles

[SoCalKid]

Originally Posted by nmkef

I think a good portion of your latter points are covered by DTLA2040 yea? A shame it's been in limbo for years on end.

From my understanding it would upzone much of DTLA and provide administrative approvals. Those two things are very important and should be done in every community plan update in LA. Unfortunately, most of the other things I posted about are citywide issues that can't be addressed in a Specific Plan or Community Plan like this.

[citywatch]

The 54th floor lounge inside the U.S. Bank Tower in downtown Los Angeles (Photo courtesy of John Salangsang)


In some areas, the new look of U.S. Bank Tower in downtown Los Angeles will feel more like hanging out in a hotel than an office building. The building's amenities include a newly renovated 54th floor with couches and lounge chairs, concierge service and different programming such as cooking classes and free business headshots

The building is currently 50% to 70% occupied Monday to Thursday, with Friday having the fewest people coming in. Tenants in the building can relax on a newly renovated 54th floor with couches and lounge chairs, stay warm in front of a fireplace, check out the various artworks from 8mm film cameras and projectors to vintage movie posters, or just marvel at downtown's skyline.

The amenities are all part of Silverstein Properties' $60 million "hoteling" of the iconic 1,000-foot U.S. Bank Tower, one of the tallest skyscrapers west of the Mississippi.

The high-end improvements highlight the cultural tug-of-war property owners face as employers — their tenants — grapple with bringing workers, who many have grown accustomed to working remotely, back to the drab office buildings.

According to access control company Kastle, which has tracked the number of people coming in and out of their more than 2,600 buildings nationwide, the Los Angeles metro area averaged a 48% occupancy rate ending March.
Before the pandemic, office occupancy in downtown Los Angeles was in the high 90s. During the height of the pandemic, it dropped to single digits.

The Downtown Center Business Improvement District's end of the 2022 year report found that office occupancy in downtown LA rose as high as 68%. However, total visitation still lags pre-pandemic numbers. In the fourth quarter of 2022, there were 3.4 million workplace visits. At the end of 2019, it was 5.4 million.

Griffin added that other office property owners will need to do something similar to attract and retain tenants. In November, the company signed five new companies to leases totaling 72,000 square feet. The building has a 50% to 70% occupancy rate, mostly Monday to Thursday, with Friday having the fewest people coming in, according to McQuillan.

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