Downtown Los Angeles' real estate market is riding a wave of success, due in no small part to investment from major firms based in China. This past August, our client Shenzhen Hazens Real Estate Group Co. acquired the 178-room Luxe City Center hotel, located across the street from Staples Center and L.A. Live, and will be adding condominiums and retail space to the site. As noted by the Wall Street Journal's Craig Karmin, this purchase is part of a "flurry of new development and property sales," and comes on the heels of two other major Chinese-based investments in major Downtown Los Angeles properties: the Greenland Group's purchase of the Metropolis site just east of L.A. Live, and Oceanwide Real Estate Group's purchase of the Fig Central site in Downtown's South Park neighborhood.
It's important to note that Shenzhen Hazens Real Estate Group's investment is for the long-term: just after the purchase of the Luxe site, Shenzhen Hazens and the Luxe Hotel Group signed a five-year contract to continue their partnership and to maximize their opportunities.
Why is Downtown Los Angeles appealing to large, institutional investors? First, Downtown Los Angeles' status as an urban center with a solid base of residential, retail, and hotel real estate makes it very appealing for investors looking for longer-term investments. Second, unlike San Francisco and New York City, Downtown Los Angeles still has underutilized parcels, such as parking lots, in strategically-located areas that are appealing as sites for future large-scale projects. Third, as a trading hub that is home to one of the world's busiest container shipping ports, Los Angeles is in a prime location in the Pacific Rim to benefit from future global economic growth.
Eddie Kim, writing for the Downtown News, noted that many of these Chinese investment firms are looking to "get in on the cultural and residential renaissance in the Central City."
The result of this influx of investment will be nothing less than a re-working of Downtown Los Angeles' skyline. Proposed housing for the area is not in the hundreds of units - it's in the thousands. Greenland Group's hotel and residential towers will top out at 19 and 38 floors, respectively. Oceanwide Real Estate Group's project will have two towers at 45 and 33 stories. And along with building a new hotel on the current Luxe Hotel site, Shenzhen Hazens will build high-rise towers for both residential and commercial space.
Not only will the skyline be changing, but for those who live or work in Downtown Los Angeles, their experience will change as well. Each of these new, showcase developments will be mixed-use projects, enabling workers, residents, and shoppers to all take part in Downtown Los Angeles' fast-paced revitalization.
It's also good to know that the private sector's investment is spurring action in the public sector as well. This week, Los Angeles Mayor Eric Garcetti is leading a trade mission to Asia, bringing along business leaders from the Los Angeles Economic Development Corporation, the Los Angeles Business Council, and the Los Angeles Area Chamber of Commerce. One of the Mayor's key goals is to seek partnerships that encourage Asian business partners - including those based in China - to invest in Los Angeles to create jobs and to spur additional economic growth. We applaud Mayor Garcetti's efforts, recognizing that the Los Angeles region stands to benefit from additional international investment.
Downtown Los Angeles' resurgence exemplifies for all of us how in this day and age, economic development doesn't just happen on its own - it happens because of partnerships with internationally-based companies who are looking to share in our success.