Friday, January 06, 2006

Curbed LA "Housing Market Guru - Gets Everything Wrong, Wrong, Wrong! Is This Another Wooly 'Wolf' Story?

In what I can only fervently pray was merely a partially successful attempt at humor - normally reliable LA Curbed recently printed the LA equivalent of announcing they had just bought the Brooklyn Bridge by quoting someone called their 'housing guru'.

And I assume this was meant to be a humorous hoax since if there is anything that wasn't pretty much dead wrong in this report - I have yet to figure it out:

"Lofts, lofts, lofts... Starting downtown, but sort of always happening in Venice, this trend exploded and expanded to Hollywood/West Hollywood which leads to some crucial questions and concerns.

Well, if by "always" in "lofts" he means artist's studios in storefronts and some warehouses and factory buildings, well, yeah - they were in Venice since the 1950's but downtown also had them since at least the 1950's. And almost of the first real artists lofts - AIR's - Artists-In-Residence buildings - were primarily downtown. And they were/are quite different than the lofts that are now being built downtown.

And as for the number major loft/condo conversions that have so far "exploded" or opened in Hollywood or West Hollywood - the number that comes to mind to me is - zero. Just a few new apartment buildings called lofts have so far opened in this 'explosion'.

It FELT (to me and my group of peers at least) that the downtown loft boom was driven more by - its the last place I can afford to buy since I missed out on getting a house and lofts are cooler than condos - than a real desire to LIVE downtown. Thus, money/economic reality, not the intrinsic quality of life of downtown drove sales.

Uh, totally dead, 100% - wrong.

I mean totally, completely... 0% true.

The downtown loft boom was 100% fueled by the desire to live downtown since 100% of all lofts in the first few years were rentals - and not condos. And since there was nothing for sale for the first few years, people then came and continue to come downtown because they want to live downtown.

In fact, not long ago one-half of ALL new residential units being permitted in the entire City of Los Angeles were in Downtown LA - and every one single of those units leased simply because they were downtown before the first condo even opened. I might add that since I moved here before the first loft opened (PTG, i.e. - Pre-Tom Gilmore) and met many of the people in each of the buildings as they moved, I know this from first hand knowledge.

Now as for moving here because prices were cheaper once the condos started opening - when the first buildings opened the fastest selling units were those at the top of the market the more expensive the unit, the faster it sold. In fact, I can not recall even one person saying they bought here in the early days of the conversions because it was cheaper than they could buy elsewhere. Some undoubtedly felt that way - but it was never a driving force in the market which this source would know if they had actually lived here during that time.

Many did additionally buy because they felt it was a good investment, however, which is different than they buying because it was the only place they could afford to buy.

Which means, now that lofts can cost $700,000 downtown, do I still want to go? Downtown does not have an Abbott Kinney (established) or a Hollywood Blvd/Sunset (getting established) as a draw. Four businessman places to eat, two hipster bars and the Standard do not a draw make. Now that I can buy lofts in Hollywood for the same price (and there were not even any to buy at any price, really before) do I want to go downtown?

First, there are downtown lofts in the $300,000's, $400,000's, $500,000's and the $600,000's. Sure they can cost 700,000 or two million, but most are priced well below $700,000. And while I still hear from people all over the city saying they want to move Downtown because of what is happening here, I have never heard anyone say they want to move to Hollywood because of its unique lifestyle. Some may, of course, but I have never heard anyone say that.

Now I have heard people say they are looking at condos are looking at condos in Hollywood for a variety of reasons - like because it is close to work and other practical reasons - but the idea of Hollywood as a major destination for buyers because of the unique cultural qualities of the neighborhood simply does not exist anywhere near degree that feeling exists about Downtown.

Now as for the Abbott Kinney and the 'Four businessman places to eat, two hipster bars and the Standard do not a draw make' remark, I used to live in Venice and I would walk to Abbott Kinney - and it has shots and restaurants - and that is pretty much what you can walk to. And Hollywood also has shops and restaurants and films theaters, scattered over many miles.

But Downtown I can - or soon will - walk to the Central Library, Little Tokyo and its theaters and museums, Chinatown and its new Arts District, the Original Arts District with its galleries and theaters, the galleries at SCI-Arc, the six - yes, SIX - new theaters that will be opening just on Main Street (St. Vibiana's Cathedral, the Linda Lea, the free standing theater that will be part of the new Police Headquarters, the Historic Merced Theater, the new Theater at County's new Mexican-American Cultural Center and the Regent Theater), the four theaters that will be re-open just on Broadway by the end of this year (the Orpheum, the Los Angeles, the Palace and the Million Dollar - with many more to come), the Fashion District, Disney Hall, the Music Center, Staples Center, the RedCat Theater and Gallery, the Wells Fargo Museum of the West, concerts at the Colburn School's Zipper Auditorium, free outdoor concerts and film screenings at California Plaza, the free Zocalo lectures, free outdoor concerts and film screenings in Pershing Square, countless shows and expositions of every kind at the Convention Center, Santee Alley, winter ice skating at Pershing Square, parties by the outdoor pool of Hotel Figueroa and the rooftop pool of the Standard, free outdoor Shakespeare at the Cathedral every summer, St. Vincent's Court, the Bradbury Building, the four theaters of the Los Angeles Theater Center on Spring Street, MOCA - both buildings of the Museum of Contemporary Art and the events at its theater, the Japanese American Cultural Center, the Chinese Museum, the new Democracy Center and Museum, Exposition Park and its many museums, the re-opened theater at the Embassy Auditorium, the eventually to re-open theaters at the old Variety Arts Building, the multiple farmer's markets, The Mayan theater/club, the Japanese American Museum, the soon to be relocated into 20,000 feet space Neon Museum, the hopefully about to be announced move back downtown Architecture and Design Museum, the upcoming Grammy's Theater and museum, USC (and its libraries, museums and concert halls), Gallery Row and its non-profit arts spaces, the Smell all ages night club, the multiple museums around the historic Plaza, the new Mexican-American Museum and Cultural Center across from the Plaza, the new Transportation Museum, private screening rooms and arts spaces, the Flower District, the Fashion School and its museum, and hundreds other unique attractions that can only be found in the heart of a major international city - plus new attractions that are being every single week.

Four businessman places to eat, two hipster bars and the Standard do not a draw make?

I don't think so.


And, the biggest risk of all, there is no shortage of space downtown to convert, so they have to be VERY careful with the supply/demand mix. Unlike Malibu or the Hollywood Hills where they simply - just really can't make much more housing, there are millions of feet of rental/commercial/residential rentals to turn into condos.

OK - this is where it clear that besides knowing zero about downtown - this expert knows even less about real estate. First he says says that Downtown can't compete with Hollywood because it lacks Hollywood's urban attractions - and then he says Downtown has a problem because it can build more condos than Malibu or the Hollywood Hills - which are essentially single family neighborhoods .


First, as far as the idea there are unlimited millions of feet to turn into housing downtown and that that is a problem - again, whoever this person is clearly has no knowledge about LA, real estate - or, more far importantly - urbanism.

To begin with, the supply of pre-war office buildings that can be bought and converted to condos is already close to zero.

Almost all of them have been already converted, are in processes of being converted or are owned by people who are going to convert them. Only handful of pre-war buildings are left for anyone new to the party to buy and convert.

This is why so many new condos are under construction; the supply of existing buildings is simply not able to supply the demand. Plus so many of the post-War II buildings are now being converted, that office rents are starting to rise and many Class A buildings are nearly 100%occupied.

Even the old Transamerica 32 story Tower which was going to convert - is now 100% leased as offices and is going to remain an office building and its shorter neighbor has been sold to the city also for office space. And several other office buildings that had been proposed to be converted - are now signing long term leases as office buildings.

The market has already taken care of the mix; the conversion cycle is rapidly coming to an end and by the end of the decade, it will be over.

And again, it is clear this is a person with no real world experience in how a major city operates. Only in a place where there is the kind of population concentration that exists in Paris, New York or London can a great international level urban center develop. And only Downtown has the building opportunities and the transportation infrastructure to create that kind of unique, world class urban center with hundreds of unique attractions within easy walking distance of each other.

And that is why I left Malibu and came here and why most of us came here, and not Hollywood or any other part of the city.

Downtown is where the 21st Century is going to happen and we want to be apart of it.


Anonymous said...

I think so many people have traditionally thought of downtown as being a dull and shabby part of LA (full of mostly vacant decrepit, or even newer, buildings and lifeless sidewalks), that they're more likely to read things like "four businessman places to eat, two hipster bars and the Standard do not a draw make," and nod in agreement----as I started to do, even though I should know better. That's why your response to the "housing market guru," and in particular your lengthy list of downtown's attraction, is so good.

If has any sense, they'll run your rebuttal on one of their web pages.

Scott said...

Brady, as a resident since August '05, I've already drunk the downtown Kool-Aid (if you want to apply the usual anti-Downtown spin to things), but I have to say you are right on here, 100% on the money with your post. When I read that post on Curbed, I too thought: "What are they even talking about? This is all messed up."

Even a cursory glance at the Downtown News will reveal many more than "four businessman places to eat, two hipster bars and The Standard." Perhaps they were employing reverse hyperbole (as you guessed, in a failed attempt at humor), or perhaps they're just ignorant (not stupid, but ignorant, there's quite a difference there -- they just don't have all the facts).

But if that's the meme among those not onboard the downtown revitalization train, then obviously you and me have a LOT MORE WORK to do, in spite all the press about the "Downtown Boom" of the last year or so. Time to get to work.

Scott said...

By the way, I should note that Curbed has NOT posted a rebuttal, and that they "stand by their position," BUT, in fairness, they did link to this post. Fair enough.

Anonymous said...

The risk you take in Downtown, Hollywood, and Venice is all the same.


It's bigger in Downtown, you have TWO jails, lots of skid-row services, and the happy dumping ground for every impoverished homeless guys for the county and neighboring cities. If policing can't provide a safe Downtown then your investment goes down. Given Mayor Tony's defining stint as Chair of the ACLU, that's a good bet.

Anonymous said...

Downtown is only at the begining of the process of gentrification. Hollywood has been moving forward for almost 20 years now. Those who make the investment now will reap the benefits in the years to come.

Anonymous said...

Downtown is on the rise, just as Venice and Hollywood had to climb out of issues such as crime and homeless so will the Downtown area. With the rising price of gas and teh desire to leave the car behind todays youth are looking to the center of the city for their homes.

Anonymous said...

Downtown is really coming along. With the completion of LA Live coming along and the Grand Ave project in the works it is only a matter of time.

Los Angeles Lofts said...

its great i think. they are basically "manhattanizing" downtown la. i just the subway was better thought out. but its cool what they've done and doing with downtown la