LOS ANGELES-Since the commercial real estate world tends to focus on the office sector, market drivers are often gauged by jobs and absorption in office high-rises, particularly in Los Angeles, Chris Cooper, principal and managing director of the Southern California region for Avison Young, tells GlobeSt.com. “This is important, but I think that the two big drivers in L.A. are going to be 1. continued demand for creative space—mostly seen on the West side and the whole Silicon Beach region—and 2. increased demand for hospitality, especially in the Downtown area. Those are the drivers and the headlines.”
Cooper will be elaborating on these trends when he speaks on the panel “Brokerage Leadership Insights” during RealShare Los Angeles on March 27. The RealShare conference series is produced by ALM's Real Estate Media Group, which also publishes GlobeSt.com and Real Estate Forum.
As GlobeSt.com reported earlier this week, Bill Stadler, senior managing director for HFF, says that current West Coast hotel development activity is focused on self-service, rather than full-service hotels. Cooper says that while he agrees with that, there are still quite a few spectacular full-service hotel developments in-the-works in Los Angeles, such as the JW Marriott project and Korean Air Lines' $1-billion Wilshire Grand redevelopment, the latter of which will dramatically change the L.A. skyline when completed. “That said, we have to be able to attract the major conventions and to attract all kinds of tourists and families. In order to attract a broader base of visitors to L.A., you have to appeal to the different price points and requirements. You can't build throughout your downtown base just a bunch of four- and five-star hotels—you won't get the full tourist or convention business. People are very cost conscious.”
Cooper adds that the Farmer's Field stadium project, on which GlobeSt.com has previously reported, must get going because of the much-needed expansion of the Los Angeles Convention Center. “It's really disappointing that we are not able at this juncture to attract the top conventions in the country: we have the best weather, the best entertainment, tremendous resorts and theme parks, museums, L.A. Live, studio tours, Disneyland—but we can't attract people if we don't have a convention-center facility and we don't have hotel rooms.”
The retention of talent in the technology, entertainment and social-media fields is driving the demand for creative space in L.A., says Cooper. “These are highly educated individuals coming out of some of the country's top universities who are looking for a work environment that is attractive, socially responsible and in a location where there's housing they can afford.” Submarkets such as Silicon Beach, Venice, Santa Monica and Playa Vista are seeing this demand.
Also, some creative-space users are moving into the Downtown L.A. area, looking at adaptive reuse of lofts for office work. “Rents are much higher in West L.A. and Santa Monica than they are in West Hollywood, mid-Wilshire and Downtown L.A.,” says Cooper. “Cost is very important, but the battle for talent is what's so important today, and a lot of organizations see that as a competitive advantage.”
Where the CEO lives used to be important to many organizations, and while that's still important, “ 'Where should we be so we can retain top talent' is the question.' ”
What do you see as important drivers for the L.A. market? Tell us your thoughts in the box below.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
