You can pick up some of your most cogent, well-spoken market information from cab drivers… A hack in LA was no exception earlier this week. “It's the smart young people who work hard and play hard who are moving into downtown.” And he should know—he shuttles them back-and forth between the Staples Center's one-big open sports-bar scene and rental apartment towers, which spring up and shoehorn in among office buildings and decked parking garages east of the 110 Harbor Freeway. With people actually shopping and staying downtown in notable numbers, the lackluster Macy's-Sheraton Hotel block is getting a total makeover and the dated, uninspiring Wilshire Grand hotel has been demolished and will be replaced by a new sloping-glass office-hotel-retail complex—the tallest building in the West, another cabbie knew all about that. More Times Square light-and-sign displays are in the offing like the ones in the Staples Center plaza. And now the local law has been changed after 40 years to give developers and their architects the freedom to design skyscraper projects without helipad landing strips, opening the possibility for more alluring skyline designs.
Downtown has come a long way since the first time I visited more than 30 years ago. Then one fall evening circa 1983 gazing down from the meeting/event space at the top of the city's tallest office building, First Interstate Tower, all you saw below were cars emerging from underground parking garages to return home—the sidewalks were lifeless, the street scene dead after dark. It was the classic 9 to 5 office business node, and occupancies and rents were headed one way--down. Certainly no developer in his right mind would have thought of building apartments.
Today, downtown LA is cited as an example of the move-back in trends and growing favor of urban lifestyles, especially among the young adult millennial generation. Since 2000 downtown's population has nearly tripled to more than 52,000 residents and these residents have a median age of 34 years and a median income of $98,700—just perfect for charging high rents in luxury buildings.
Still, once you get past the simple convenience of living close to where you work, the highly walkable streets, and having nearby restaurants and bars to hang out in, what is the allure of this revamped downtown? The Lakers games are nearby too and a modest museum-arts district has formed at the north-end. Okay, and Ralphs has put in a supermarket and you can find a drug store.
But this is not a family-friendly place and no place to raise kids—where are the parks? The rather miniscule, despite its name, Grand Hope Park, offers a small, token playground. I did see two toddlers there with parents who looked like they were out-of-towners, finding some brief respite. All the new apartment buildings have their requisite parking decks—this is still LA, of course, a car is absolutely essential—and some have swimming pools.
Greater Los Angeles developed as the granddaddy suburban agglomeration where backyards served as private parks and subdivisions were designed for family life. But in reviving downtown LA, planners and developers have left out the green space, the ball fields, and the bike paths. This claustrophobic concentration of towers and concrete plazas hardly resembles anything approaching an urban neighborhood and that's not the idea.
The new and transformed downtown is tailored pretty much exclusively for those career-minded hard chargers, who are delaying marriage and putting off children. But what happens when this generation Y bubble moves on and wants more than just a place to work and sleep? When the social scene doesn't involve meeting at a bar after work or going to the hockey game? Of course, what happens in five or ten years as the millennial market winds down is not the concern of today's apartment developers and investors who are looking to appeal to current demand and profit accordingly right now.
They will have cashed out by then.
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
