Downtown LA Stakeholders Hoping For Rosier Future In Changing Economy, New Administration

Downtown Los Angeles is still recovering from the effects of the coronavirus pandemic, a struggle that is perhaps most starkly visible in its offices.

Offices in the Los Angeles metro area averaged less than 50% of pre-pandemic occupancy last week, keycard company Kastle Systems found. On some days Downtown, it seems like even that estimate could be high. 

But Silverstein Properties CEO Marty Burger, whose company owns the 72-story U.S. Bank Tower Downtown, is optimistic that, out of a desire for collaboration and job security, people will return. 

"We looked at downtown New York and how that rebounded from 9/11, and we saw a lot of the same features in Downtown LA that we had in New York: good transportation, young people who wanted to move Downtown, people living where they work so they could walk to work," Burger told the audience at Bisnow's Downtown Los Angeles CRE Market Update event on March 28 in U.S. Bank Tower. 

Silverstein Properties has reason for optimism. It bought the tower in 2020, paying $430M, then spent $60M on upgrades to the space. 

Though office returns are happening slowly, Burger suggested, as other CEOs have, that the layoffs that have hit some of tech and media's top companies are working in landlords' favor.

In Silverstein's 4 World Trade Center in New York City, Spotify occupies about 700K SF. The tower was maintaining a roughly 22% occupancy rate, Burger said, until announcements that layoffs were coming began to make the rounds. 

"The next day 77% of people showed up to work," Burger said. 

Workers overall are not going to be in the office exactly as they were before, Burger conceded.

"But nothing beats, you know, being in an office together in a collaborative environment, and I think everyone's finally realizing that," he said. 

But as moderator and Allen Matkins partner Alain R'bibo noted, one thing that has caused his firm's Century City office to see workers return in greater numbers than in Downtown were concerns around safety, about Downtown's unhoused population and a lack of amenities on the ground floor. 

The subject of people experiencing homelessness and concerns about crime were touched on by speakers throughout the event. Though many categories of crime were down at the end of 2022 in Los Angeles citywide, the Los Angeles Times reported, robberies and property crimes in Downtown rose, according to LAPD statistics.

Weingart Center Chief Operating Officer Tonja Boykin said Mayor Karen Bass' executive directive to hasten the construction of fully affordable housing in the city is already working.

One element of the directive is it mandates that departments reviewing applications for 100% affordable developments complete those reviews within 60 days, rather than the six to nine months they would normally take, the Los Angeles Times reported.

"We're moving faster than ever," said Boykin, whose organization builds supportive and affordable housing. "The fact that we've made this move now means that we can do things quickly, we can help more people."