The cyclical nature of downtown urban hubs can be traced across many cities around the world. When a city experiences a boom in one distinct area, a downtown is born, bringing new office and residential buildings, retail and more.
People move in, living and working in the same location and luring new businesses to the area. But as popularity surges, residential and commercial rents often become expensive, pricing out the residents and small shops that exist in the area. In turn, these people and businesses move just outside the city limits in search of less expensive rent, creating new up-and-coming neighborhoods. Slowly, all that’s left downtown are the big businesses that can afford to stay there. Rents drop, a new generation rediscovers the area, and the downtown is born anew.
Sound familiar? This ongoing cycle has occurred in New York, Detroit, Boston, San Francisco and many other cities, but perhaps most notably in Los Angeles.
“When Los Angeles was originally becoming a city, downtown was built in a very specific location that was relatively close to Union Station, and the historic core grew close to there,” says John Zanetos, senior vice president in the Los Angeles office of CBRE. “The modern downtown was built during the 1980s and early 1990s; the last building was completed in 1992.”
When Los Angeles was originally becoming a city, downtown was built in a very specific location that was relatively close to Union Station, and the historic core grew close to there.
But then the LA riots gripped the city that same summer, deterring new retail, restaurants and art galleries from following the new office buildings that had just gone up downtown.
“The other pieces to the puzzle, the residential buildings and other amenities that would weave together with the offices to form a thriving downtown never happened,” concludes Zanetos.
As new neighborhoods surrounding downtown continued to pop up and gain popularity with residents and local businesses, what was left was a downtown without a pulse; a business hub carrying little allure amidst the ever-sprawling city, where traffic often deters residents from traveling outside their work-home loop.
That all changed within the past decade. According to the LA Times, the current construction development of downtown is the largest boom the area has seen since the 1920s. Seventy-nine developments 50,000 square feet or larger have been built since the beginning of the decade. But while the city continues to be built up, commercial rents have stayed relatively low—lower than many of the affluent suburbs in the surrounding areas—allowing a new surge of retail shops, art galleries and restaurants to find a foothold in the burgeoning downtown.
“The resurgence in downtown LA is due to the fact that younger and older people alike want to live closer to work, to activities and to interesting experiences. In the greater suburbs of the city it’s tough to find any sort of historic culture; some of these communities were built only a few decades ago. So residents are finding that in the gorgeous old architectural buildings of downtown,” says Andrew Turf, senior vice president of High Street Retail Services in the Los Angeles office of CBRE. “With that brings retail, movie theaters, entertainment and restaurants because you have inexpensive rent and unique neighborhoods to build a brand around, like what Bestia’s done in the Arts District.”
The resurgence in downtown LA is due to the fact that younger and older people alike want to live closer to work, to activities and to interesting experiences.
A prime example of a business that’s helped shape the area, Bestia—a modern-day Italian restaurant—opened in 2012 in an area that many wouldn’t even have considered to be up-and-coming.
The popularity of the restaurant proved to be a tempting draw for small businesses looking to open a shop in an area with inexpensive rent. Today, its neighbors include a handful of art galleries and performing arts spaces, high-end coffee shops and unique retail boutiques.
“People woke up to the fact that the area is around 10 miles from the ocean, has over half a million people working here and the old architectural spaces were renting for much less than surrounding areas,” Turf explained. “You want to live in a vibrant area with interesting people and interesting things to do? That’s downtown Los Angeles.”
09 November 2015 by Sachin Shenolikar