A strong U.S. economy through the end of 2018 buttressed what commercial real estate leader CBRE deemed to be the nation’s strongest market for the third consecutive year: Los Angeles.
Based on a survey of 300 institutional and private commercial real estate investors who were queried about which commercial real estate market they believed was the most attractive for property investment, Los Angeles emerged victorious in 2018, besting Dallas Fort-Worth and New York, which finished second and third.
The robust U.S. economy and tax incentives that have totaled over $1 billion since 2005 have provided stimulus for new projects and hotel brands to enter the LA market. The increase in hotel rooms has had a ripple effect, making it easier for the city to host large conventions and support new sports and entertainment-related projects. At Millman National Land Services, we specialize in performing studies of complex projects, including ALTA Table A items.
A robust number of projects starts through 2018
Led by keystone projects like the new $2.6 billion NFL Arena in Inglewood that will be home to both the LA Rams and LA Chargers, there were 18 major projects underway as of Q4 2018. Among these were several new multifamily projects, three large hotels and multiple creative office projects focused on the coworking space.
The football stadium has been planned to be the centerpiece of a new urban village that will eventually include several hundred residential units and urban retail.
Innovative projects are leading the way
One aspect of the LA market that investors find compelling is the impressive array of projects, ranging from historic rehabilitation to dramatic new hospitality and residential developments. Ongoing and recently approved projects include:
- Major (to the tune of $60 million) renovation of the historic Breakers hotel in Long Beach by Pacific6.
- A 22-story residential tower at Sunset and Gordon by the CIM group approved by the Los Angeles City Council after a long delay due to site prep violations.
- A dramatic new 15-story hotel and condominium project by Silver Creek Co. designed by Morphosis architects.
- 668 Alameda: a 475-unit live-work project by Avalon Bay beginning in 2019.
- A proposed downtown mega-development by Sun Cal near 668 Alameda for over 1,700 housing units to be designed by Herzog & de Meuron architects.
- The redevelopment of Baldwin Hills Crenshaw Plaza by Chicago-based Capri Capital Partners; mixed-use retail, hotel and residential project containing 1,000 units.
- Redevelopment of Westside Pavilion into 584,000 square feet of office space; Google has committed to the entire project with a 14-year lease commencing in 2022.
Unlike other cities where certain asset classes dominate the market, LA has seen strength continue across a broad base. Multifamily, hospitality, self-storage/industrial and office sectors all continue to be among the national leaders in vacancy and new starts.
Perhaps the most impressive sign of investor and corporate confidence in the LA market comes from three of the world’s largest companies: Google, Apple and Amazon.
In addition to the new commitment at the Westside Pavilion, Google recently completed its 300,000 square foot office at the historic Spruce Goose hangar in Playa Vista. Google subsidiary YouTube owns an adjacent site there with development entitled for 900,000 square feet.
In Culver City, both Amazon and Apple have signed a large, long-term lease for their studio and content divisions.
With an ACSM Land Title Survey, developers, attorneys, and investors can be assured of getting the highest standards for their commercial real estate requirements. At Millman National Land Services, we provide ALTA Surveys nationwide and look forward to serving you.