L.A.'s skyline has changed a lot in the 35 years that Jim Thomas has been developing downtown properties a lot more than the players.

"The property that we compete with and that I spend the most attention on have pretty much been owned by the same institutions for some time now," said Thomas, chief executive of Thomas Properties Group Inc. "For a time, you had the Japanese buying a lot but that turned out to be a blip."

The lack of volatility Thomas has witnessed in the Central Business District, where his company is the second largest landlord after Maguire Properties Inc., holds true for most of downtown's 14 districts, according to a survey conducted for the Business Journal by CB Richard Ellis Inc.

While stupendous proposals such as the $1 billion development surrounding Staples Center and the $1.2 billion Grand Avenue project are making headlines, many of the downtown's largest landowners have remained unchanged.

To be sure, there are some new faces, such as residential developers Geoff Palmer and Kor Group Inc. But according to CB Richard Ellis data, downtown is still dominated by private institutions such as Good Samaritan Hospital, Coca-Cola Bottling Co. of Los Angeles and the Los Angeles Times, as well as public agencies like the Los Angeles Unified School District, and city, state, county and federal branches of government.

"Institutional owners aren't going away," said Jeff Lee, principal of condo developer Lee Group Inc., builder of the Flower Street Lofts near Staples Center. "Much of their assets will never be for sale."

Indeed, the School District, the city and the state continue to absorb more property as their operations expand, which could stunt future development or overwhelm some smaller neighborhoods.

Carol Schatz, president and chief executive of the Central City Association, dismisses concerns about large institutional ownership. "Property ownership, from my 15 years of experience, is largely a function of economics and the financial position of a company that buys and sells real estate."

But that could create other issues. In the late 1980s, Japanese investors paid huge premiums to acquire large numbers of buildings, only to sell at a loss when conditions soured.

That experience should provide a sobering counterpoint to the current round of investment activity, much of it focused on residential development. With downtown ownership tied up by major entities unlikely to sell out anytime soon, the area's transformation, while significant, might not take on the magnitude that area boosters are anticipating.


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