New deals and redevelopment in once-blighted neighborhoods have driven a new renaissance in those areas, as evidenced in Berkshire Group’s announcement earlier this month it bought One Santa Fe in LA's Arts District and Rising Realty's recent purchase of the Title Insurance and Trust building. Such moves are fueling a rebirth of DTLA.
Bisnow recently caught up with downtown revitalization consultant Hal Bastian to discuss what drives a resurgence in an area developers once avoided.
Hal says the renaissance of DTLA has been years in the making and started back in 1999. That was the year the LA City Council voted in favor of the adaptive reuse ordinance.
Prior to 1999, "we spent our entire lives after World War II suburbanizing, so downtown lost its luster," Hal says.
One Santa Fe, a 500k SF apartment complex, is valued at around $200M, according to the LA Business Journal. It is the first big development in the Arts District.
Century City’s Canyon Partners Real Estate, McGregor Brown Co in Beverly Hills, Culver City’s Cowley Real Estate Partners and DTLA’s Polis Builders sold the property to Boston's Berkshire Group. The LA County Metropolitan Transportation Authority owns the land under the building.
At one-third-mile long, One Santa Fe is LA's longest building. The mixed-use, 438-unit development opened in September 2015.
Parts of downtown are becoming increasingly popular, with One Santa Fe marking just one area of interest.
Rising Realty Partners just bought the Title Insurance and Trust building (above) at 433 South Spring St. Spring Street was an empty street 16 years ago, according to Hal.
As a result of the adaptive reuse ordinance, which Hal helped champion, he says Spring Street now probably houses more than 8,000 people. It has also become a desirable place for offices again, so “we’ve come full circle” with Rising’s recent purchase, Hal says.
Rising Realty SVP Matt Ahrens (pictured with his wife, Brittney, daughters, Harper and Lucy, and son, Hudson) tells Bisnow the firm was attracted to the area because "the historic core gives our tenants the best of both worlds—the walkable, edgy urban environment that draws people to the Arts District and the historic core, but also close to the transit system."
It helps that it's walking distance to the Financial District, according to Matt.
Rising Realty has "very particular requirements" for its historic building conversions, Matt says. The buildings "have to have the bones and the floor plates that provide tenants with a really unique experience."
Rising Realty is no stranger to the draw of DTLA.
When Rising picked up PacMutual (above) in DTLA about four years ago for $60M, it transformed the property into one of the most sought-after spots in LA. The firm spent nearly $20M on the repositioning, making the campus an attraction.
Rising later brought on Lionstone Investments as its equity partner after recapitalizing the property at 523 6th St. PacMutual consists of three connected buildings built between 1908 and 1926.
Rising sold the property last year, making roughly $200M off the sale of the 464k SF building. Chicago-based Callahan Capital Properties and Montreal-based Ivanhoé Cambridge purchased the building.
What’s happening downtown is just the beginning, according to Hal.
“The train has left the station, and we’re just getting started,” he says.
Hal says he is convinced more residential growth is coming to DTLA because “people will realize commuting is not a way to spend their lives.”
If people choose to live downtown, “they can live, work and play here and get their lives back,” Hal says.
For those who haven’t ventured downtown in recent years and may have cast it in a negative light, it may be time for another visit. "If you haven’t been downtown lately, you haven’t been downtown," Hal says.