LOS ANGELES-The hospitality sector is drawing investors to Downtown Los Angeles, according to Chris Martin, AC Martin CEO and co-chairman, who, along with AEG CEO Dan Beckerman, sat down with GlobeSt.com to discuss downtown's booming entertainment sector. On January 9, Martin and Beckerman will join PFK Consulting SVP Bruce Baltin and Marriott International Inc. SVP of lodging and development Alison Cumberland on the entertainment panel at the Renaissance of Downtown Los Angeles: Opportunity Knocks conference.
“In 2012 alone we saw an uptick in tourism, occupancy rates and a 12% increase in room revenue,” Martin tells GlobeSt.com. “These are encouraging trends that have certainly led to significant investment and development in the hospitality sector. It's clear that the sector will continue to play a role in the economic future of Downtown Los Angeles.” Notable investments in the hospitality sector include Korean Air's $1 billion investment in the Wilshire Grand project.
Martin and Beckerman agree that the entertainment sector plays a vital role in the downtown renaissance. “It has drawn in more consumers and made downtown a place for people to go out and to enjoy their weekends and evenings,” Martin says. “Downtown has not only become a tourist destination; it has become a more appealing place to live.” Beckerman adds that entertainment has kept up with multifamily and retail, especially in the Figueroa Corridor. AEG alone has 40 projects currently underway in the downtown market.
Martin points to multifamily as a driver of the entertainment sector, saying, “Right now, Downtown Los Angeles is the fastest growing community in the City of Los Angeles, and these new residents want leisure and recreation options.” Although both he and Beckerman explain that entertainment is also an economic driver. “The 1998 opening of STAPLES Center, we can trace tremendous growth of the Downtown hospitality sector including restaurants, bars, clubs, hotels, museums, cultural programming and housing,” Beckerman tells GlobeSt.com. “Development has not been limited to the areas immediately adjacent to STAPLES Center as similar growth also has occurred in South Park, the fashion district, historic core and theatre district among others timed to the grand openings of STAPLES Center and ultimately L.A. LIVE.” Beckerman adds that AEG expects similar growth with the addition of “modernized” Los Angeles Convention Center and the new Farmers Field NFL Stadium.
These are among the topics that Beckerman and Martin will discuss on the entertainment panel, along with what new opportunities are available to downtown stakeholders, the shift in development trends and the positive impact hospitality has on other sectors in the downtown market.
Of course, the conference also includes panels on retail, residential and office activity in the downtown market. Bert Dezzutti, SVP of Brookfield Office Properties, explains that investor demand in the office sector is spread across core, core-plus and value-add. Dezzutti will speak on the conference's office panel along with Robert A. Jernigan, managing principal of the Southwest Region at Gensler; Martin Caverly, EVOQ Properties; Nelson Rising, chairman and CEO of Rising Realty Partners; Richard Stockton, president and CEO of Oue Limited, Americas.
“Investors will continue to look for opportunities to place capital; the investment market is expected to see lower cap rates and larger sales over the coming months,” Dezzutti tells GlobeSt.com. Development in the office sector, however, has yet to pick up, and Dezzutti believes we are still a few years away, explaining that rents will need to rise significantly to support new construction.
On the panel, Dezzutti plans to cover the creative, tech and entertainment office demand. “With these types of tenants being squeezed out of the Silicon Beach and Westside submarkets due to limited supply, we are beginning to see a shift toward creative tenants moving downtown,” he explains. Of the forces driving the office center, Dezzutti notes tenant demand, transportation hubs and an expanding residential base as some of the main factors.
In an earlier story, Carol Schatz, CEO of the Downtown Center Business Improvement District and Central City Association, spoke with GlobeSt.com about the upcoming conference, explaining that hospitality is the newest sector to pop in the downtown renaissance. Multifamily and retail, of course, are sectors that have already experienced tremendous growth, and are expected to continue to grow.
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Kelsi Maree Borland
