Downtown Ground-Floor Retail Key To Enticing Office Workers Back, Greater Revitalization
Downtown property owners and leasing experts are looking to the power of retail to help make the office attractive to workers — attractive enough to make them want to come back.
“You're competing against the return to work,” Lincoln Property Co. Vice President of Leasing Douglas Brown said. “You need to offer amenities, you need to offer an experience. Something that's in your building, that's going to get people excited, that's going to make that main decision-maker believe that this is going to help get his people back in the office.”
The retail presence on the ground level is “hugely important” to the success of office buildings, Brown told attendees at Bisnow’s Downtown Los Angeles State of the Market event at the Aon Center.
It’s also something that many speakers noted contributes to the overall successful rebound of Downtown. Occupied storefronts mean more feet on the street, theoretically leading to more dollars spent and hopefully a broader feeling of vibrancy and safety for those traversing those streets.
Though office workers are not yet back in full force Downtown, it seems as though some of the conditions that many panelists referenced are already making slight improvements. A survey of Downtown Los Angeles residents conducted in January 2024 found increases in respondents reporting improvements in homelessness, crime rates, cleanliness and transportation compared to the previous year.
Brown anticipated that some owners will need to accept some losses on the retail front in order to create an atmosphere that’s inviting to workers and a driver for people to come in. In some cases, restaurants or other fun tenants might be essentially subsidized by property owners, and that’s just something that might have to be done in order to create a desirable building.
“You need to be taken out of that commodity office bucket and separate yourself from the rest of the competition,” Brown said.
Kennedy Wilson Brokerage Vice President Justin Weiss said that around the early 2000s, when Los Angeles was first starting to see loft conversions and an influx of middle-income office workers into the area, landlords took the approach that having exciting short-term tenants was the norm and helped build interest in Downtown.
“Rather than waiting for that national credit tenant, or that tenant that you can underwrite, that can securitize the entire term or even half of the term, let's work on bringing in temporary tenants on a month-to-month basis, six-month leases, one-year leases, to activate the space,” Weiss said.
“I do think it's very important to understand that you have to give people a reason to want to come to work outside of their office,” Carolwood principal Andrew Shanfeld said. Carolwood bought the Aon Center in December, paying $147.8M. At $134 per SF, it was one of the lowest deals on a per-square-foot basis for an office tower Downtown in the last 10 years, the Real Deal reported at the time.
But the team has big plans that dovetail with what other panelists spoke to regarding activating retail and building an appealing environment. Shanfeld and his Carolwood partner Adam Rubin spoke about the food retailers they are bringing to the ground floor of the tower, the improvements they are making to the gym and the addition of a spa – all aimed at “mak[ing] your life a lot easier at work.”
