DTLA Market Shows Big Improvements at the End of 2021

The Downtown Los Angeles market is making strides in the right direction. The DCBID releases its fourth quarter market report, showing recovery in hospitality, office, retail and multifamily. Suzanne Holley, president and CEO of the DCBID, called the growth “truly inspiring.”

The hospitality sector was the shining star. RevPAR in the market during grew for the fourth consecutive quarter to $96, a 53.4% increase, and occupancy increased 69% from its pandemic low in Q1 2021. The average daily rate increased $179.00 through the end of the year, a 2.9% increase year over year. In the fourth quarter, the 315-room citizen hotel and the 148-room LA Proper Hotel opened doors.

The apartment market also had improving metrics with occupancy growing to 93.5%, an 8.7% increase year over year and average rental rates growing to $3.29 per square foot, a 13.1% increase year-over-year. Effective rents reached $2,772, an increase of 11.7% increase year over year. There continues to be an active construction pipeline. Figueroa Apartment Tower and Mitsui Fudosan’s 41-story apartment tower are both nearing completion.

While multifamily and hotels improved significantly, the retail sector also moved in the right direction. Leasing activity helped to drive vacancy down 3.2% year over year to 6% for the area, while net absorption improved 16.4%, although it was still in the red at -34,509 square feet. Additionally, the rental rate remained flat at $3.01. Lease deals in the fourth quarter include three new José Andrés restaurants opening in the completed $1 billion The Grand LA project on Bunker Hill.

The office sector continues to lag behind other asset classes, but also showed improvement at the end of the year with 250,000 square feet in leasing activity. Those major leases included Johnny Was signing for 30,000 square feet at 7th and Olive, and Bambee HR leasing three floors, a total of 45,000 square feet, at Fabric, one of two new creative office properties to open in the Fashion District. Despite the leasing activity, office metrics deteriorated with vacancy climbing to 19.8% and the lease rate down 1.3% to $3.80 per square foot.

Last year also saw some significant office deals close. SteelWave acquired The Switchyard for $80 million from in CEG Construction. The two-building 150,450-square-foot office campus is located in the Arts District in Downtown Los Angeles, located at 500 and 540 S. Santa Fe Avenue. It was developed over the last decade by the seller, and was vacant at the time of the sale. Additionally, the Box Yard in Downtown Los Angeles has traded hands for $94 million. Rexford Industrial purchased the 261,582-square-foot property as part of its substantial June acquisitions from Bridge Industrial.