In recent years, Downtown Los Angeles—often referred to as DTLA—has undergone a remarkable transformation. Once considered to simply represent the business district of LA, DTLA has grown into a vibrant hub of culture, entertainment, and commerce. For commercial property investors, this revitalization presents a number of diverse opportunities. It’s a good time to capitalize on a growing urban landscape.
Any investment portfolio can benefit from attention to DTLA. Contact us at Bell Properties Commercial Real Estate, and we’ll talk about it.
Commercial Real Estate in LA: Contributing Factors to DTLA’s Growth
Downtown LA's revitalization has been fueled by significant economic growth and infrastructure improvements. Billions of dollars have been invested in developing new office spaces, residential units, and public amenities. The expansion of public transit, including the metro system, has made the area more accessible than ever before, attracting a steady population of businesses and residents.
The appeal in cultural and lifestyle amenities has only grown in downtown LA. DTLA is no longer just a place to work for local residents and even visitors from outside of the area—it's a desirable place to live and play. With world-class dining, entertainment, and cultural venues, the area has become a destination for young professionals, remote workers, tourists, families, students, and just about every demographic. The Art District and the Fashion District add a creative energy, while venues like the Walt Disney Concert Hall and The Broad Museum draw crowds year-round. For investors, this means a diverse tenant base seeking both commercial and residential spaces.
There’s also been an uptick in tech. Startups and tech companies are increasingly setting up shop in DTLA, drawn by the area's dynamic ecosystem and proximity to other tech-savvy regions like Silicon Beach, on the western side of Los Angeles. This influx of innovation-driven companies creates a demand for flexible and modern commercial spaces, presenting lucrative opportunities for property investors.
Development Incentives to Boost DTLA Growth
To stimulate development, the City of Los Angeles offers several incentives aimed at attracting investment and revitalizing underutilized areas in DTLA. These incentives include:
Density Bonuses
The city offers density bonuses to developers who include affordable housing in their projects. This allows developers to build more units than typically permitted under zoning laws. By providing affordable housing options, developers not only contribute to community needs but also benefit from increased project yields.
Tax Abatements
Tax abatements are available for projects that meet specific criteria, such as historic preservation or standards for environmental sustainability. These abatements can significantly reduce property taxes, improving the financial feasibility of development projects.
Transit-Oriented Development (TOD)
DTLA's extensive transit network positions it as a prime location for Transit-Oriented Development. Projects located near major transit hubs can benefit from reduced parking requirements and increased building density, promoting sustainable urban living.
Adaptive Reuse Ordinance
Developers looking to convert existing buildings into new uses can take advantage of the Adaptive Reuse Ordinance. This program simplifies the permitting process for converting older buildings, making it easier to repurpose properties for residential, hotel, or mixed-use purposes.
Green Building Incentives
Projects that incorporate sustainable design and construction practices may qualify for additional incentives. These can include expedited permitting processes and potential funding support for green building features.
To fully leverage the zoning and development incentives available in DTLA, real estate developers should conduct thorough research to understand the specific zoning regulations and available incentives for target development sites. Engaging with local planning authorities early in the process can help identify the best opportunities for a project. Investors would do well to focus on mixed-use developments, which are in high demand. Prioritizing sustainability is also a smart business move. Incorporating green building practices not only meets regulatory requirements but also enhances marketability and long-term viability.
Any investor wanting to take advantage of these incentives is welcome to reach out to us at Bell Properties Commercial Real Estate. We can help navigate the process.
Notable Projects and Developments Shaping DTLA
Here are some of the most interesting projects leading the charge towards DTLA’s revitalization:
1. The Grand LA
Designed by architect Frank Gehry, The Grand LA is a mixed-use development located on Grand Avenue. This project introduces a blend of luxury residences, retail spaces, and restaurants. The inclusion of a dynamic cultural plaza further cements The Grand LA as a key player in DTLA's revitalization efforts. Investors should note its potential to draw both high-end tenants and tourists.
2. Angels Landing
Set to be one of the tallest buildings in the West, Angels Landing is a $1.5 billion development that promises to redefine the DTLA skyline. This iconic project will offer luxury condos, a boutique hotel, and an expansive public park. With its prime location and stunning design, Angels Landing is poised to become a landmark destination, attracting affluent residents and businesses.
3. The Broadway Trade Center
The historic Broadway Trade Center is undergoing a significant transformation to become a modern mixed-use complex. This redevelopment project aims to incorporate retail spaces, offices, and luxury accommodations, all while preserving its architectural heritage. Its proximity to major transportation hubs adds to its attractiveness for investors seeking long-term value in DTLA's burgeoning market.
4. South Park Mega-Project
South Park, once an underdeveloped area, is seeing a resurgence thanks to significant investments in residential and commercial properties. This mega-project includes new high-rise apartments, office spaces, and tech-friendly environments, catering to the influx of young professionals and startups. Investors should keep an eye on South Park for its potential to yield substantial returns as the demand for urban living continues to rise.
5. The Regional Connector Transit Project
Set for completion soon, the Regional Connector Transit Project is an impactful infrastructure development that will significantly enhance connectivity within DTLA and surrounding neighborhoods. By linking existing rail lines, it will provide seamless travel across the city, making DTLA more accessible and appealing to commuters and tourists. Improved transportation options are a key driver for real estate growth, making this project a pivotal factor in the area's revitalization.
For real estate investors, the area's notable projects offer a wealth of opportunities to participate in its dynamic future, and we can help. Contact us at Bell Properties Commercial Real Estate.
Opportunities for Commercial Property Investors
There are plenty of ways to grow a portfolio with commercial real estate. DTLA has some unique opportunities that would be difficult to find in any other market. Here are some interesting ways to get started:
Investing in Office Space
With the ongoing trend of businesses relocating to or expanding in DTLA, the demand for modern office space continues to rise. Investors can capitalize on this trend by developing or acquiring properties that offer flexible layouts, state-of-the-art amenities, and sustainability features that appeal to today's forward-thinking companies.
Mixed-Use Developments
Mixed-use developments that combine residential, commercial, and retail spaces are thriving in DTLA. These projects cater to the growing demand for convenience and community living, making them highly attractive to both residents and businesses. For investors, this means opportunities to diversify their portfolio and capitalize on multiple revenue streams.
Retail and Hospitality
The growing population of residents and tourists have driven demand for retail and hospitality spaces. With an increasing number of international visitors and locals seeking unique shopping and dining experiences, retail properties in DTLA offer significant potential for growth. Additionally, with major events and conventions frequently held in the area, the hospitality sector remains robust, providing opportunities for hotel development and investment.
Residential Conversions
Investors can also explore the potential of converting older office buildings into residential units. This trend is gaining momentum as more people choose to live in urban environments that offer a live-work-play lifestyle. Offering modern amenities and creative layouts can attract new generations of tenants looking for urban spaces.
While the opportunities in DTLA are abundant, investors should approach with a strategic mindset:
Market Research. Thoroughly research market trends, tenant demographics, and future development plans to make informed investment decisions.
Partnerships. Collaborate with local developers, architects, real estate agents, and a commercial property management company like Bell Properties Commercial Real Estate. We understand the unique dynamics of DTLA.
Sustainability. Consider green building practices and energy-efficient technologies to align with the growing demand for eco-friendly spaces.
Regulatory Considerations. Stay informed about zoning regulations, permits, and compliance requirements that may impact your investment plans.
Challenges and Risks for Investors in DTLA
Despite the promising opportunities, every investment comes with risks, and investing in Downtown LA's commercial property market is not without its challenges. The area's real estate market can be highly competitive, with fluctuating property prices and demand shifts influenced by economic trends. Additionally, investors must navigate complex regulatory environments and zoning laws that can impact development plans.
There is also the challenge of gentrification, which may affect community dynamics and lead to resistance from local residents. Economic swings, such as those seen during the pandemic and right after, highlight the vulnerabilities in the market, affecting rental incomes and property values.
Lastly, potential investors need to consider infrastructural constraints, such as traffic congestion and public transport limits, which can influence the commercial viability of properties in the long term.
As Los Angeles commercial property management experts, we can say that the future looks strong for DTLA. It’s a good time to invest, and we’re here to help. Contact us at Bell Properties Commercial Real Estate.
