Scary Time For DTLA Development
As all the new development underway in DTLA prepares to deliver, developers say it could be adding up to a scary time for the submarket. Will DTLA be able to handle all of the growth?
“I’m a little concerned about what I’ve seen in downtown given every week there seems to be two or three new announcements of new development,” Invesco Director of Multifamily Rob Taylor said at this month's Bisnow Big West Coast Multifamily event at the Millennium Biltmore Hotel LA in DTLA. “I don’t know if I really understand how much capacity is really in that submarket.”
MJW Investments CEO Mark Weinstein said as one of the early players in DTLA, he has seen it grow, but is concerned about what is happening now.
“I can’t even make sense of some of the projects that are being proposed and the rents you need to get to make sense,” he said.
In urban areas especially, renters are spending 45% of their income on rent, according to Pillow Residential CEO Sean Conway.
“That’s scary, and I don’t know how much further this can go,” Conway said.
Colliers International Executive Vice President Kitty Wallace said she thinks the DTLA market has a lot of positives, including in the transit-oriented space and live-work-play environments.
Downtown LA now has around 36 cranes, compared to nearly 30 cranes at the end of last year, according to a report by Rider Levett Bucknall.
The DTLA submarket is one of the top two or three nationwide for multifamily as of last quarter, according to CoStar Group Senior Market Analyst Steve Basham.
Only Atlanta had more units underway than DTLA, he said.
Seritage Growth Properties Senior Vice President of Development, Western Region Kacy Keys was involved in drafting the adaptive reuse ordinance in DTLA when she previously worked for the city.
"At the time, no one was really looking at downtown as an opportunity at all," Keys said. "We're all here, and you can see the product of that now 20 years later, how that’s played out, but that was a big risk at the time."
CORRECTION, AUG. 29, 8:40 A.M. PT: HKS principal Brendan Dunnigan in the group photo that includes IOTAS CEO Sce Pike was misidentified in a previous version of this story. The cutline has been updated.
