Downtown’s Financial District accounted for nearly one-third of the number of hotel rooms added to the industry’s inventory statewide in the first half of the year, thanks to a pair of high-profile entries and the arrival of a traditional boutique.

The InterContinental Hotel led all projects in the state when its 889 rooms debuted with the opening last month of the Wilshire Grand Center. The hotel partially occupies the 73-story tower, the tallest building west of the Mississippi River, at Wilshire Boulevard and Figueroa Street. The Hotel Indigo added 350 rooms a few blocks away on Ninth and Francisco streets, and the boutique Freehand Los Angeles accounted for 226 rooms at Eighth and Olive streets.

Those three combined for 1,465 new rooms and drove a statewide record of 4,730 for the first half of 2017, according to Alan Reay, president of Irvine-based Atlas Hospitality Group, which provided the data in its recent midyear survey.

Reay said the biggest batch of new hotel rooms over a six-month period prior to this year’s burst was 2,502 in 2008.

Downtown’s new rooms over the first half of this year came to 31 percent of the statewide total; 27 percent of the 3,931 added throughout Southern California; 83 percent of the 1,742 in the city; and 58 percent of the 2,527 across Los Angeles County.

Those numbers compare with the addition of 461 rooms over three projects that were completed during the first half of the year in Orange County; 433 rooms at two hotels in San Diego; 411 at three establishments in Riverside County; 99 rooms at one hotel in San Bernardino County; and 799 rooms at seven projects in Northern California.

Reay said he’s picked up on concerns that – even with the recent additions – Los Angeles could lose out on valuable convention business because of a shortage of rooms that are of sufficient quality within walking distance of the Convention Center and LA Live.

San Francisco and Anaheim have shown a willingness to expand convention facilities and add hotels to keep pace with visitor capacity, while San Diego is considering similar moves at its center, according to Reay.

“It’s a very competitive field,” he said.

Reay covered his bets, though, noting the comparison to the last big addition of rooms in 2008, and issuing a caution that an economic dip could trim demand if it’s deep enough to cut into spending on business travel.

Another caution came as Reay noted that the prior record for new additions came in the first half of 2008, just before the onset of the Great Recession – with an InterContinental Hotel part of the count back then – although in San Francisco rather than Los Angeles.

Cambria Premiere

Downtown’s high-end hotels have every reason to boost convention business while submarkets such as South Bay have plenty to cheer with the arrival of solid entries a notch or two below the luxe segment.

That explains why the mayors of Hawthorne and Manhattan Beach joined the chief of the El Segundo Police Department to welcome the Cambria Hotel Los Angeles – LAX. It’s the first California property for the brand – one of Rockville, Md.-based Choice Hotels’ portfolio of 11 nameplates that range from Econo Lodge to its Ascend Collection.

The ribbon-cutting will put another 152 rooms in the airport area, relatively convenient for big corporate customers that include Mattel Inc., Northrop Grumman Corp. and Raytheon Co., among others with significant operations in the area.

El Segundo is the first Cambria location on the West Coast, with others expected in downtown Los Angeles, Glendale, Anaheim and Napa.

Industrial Heat

A recent deal that put a six-building complex in the portfolio of Rexford Industrial Realty Inc. indicates the industrial market remains hot – and even hotter for Class A space near the ports.

The Brentwood-based REIT apparently paid an affiliate of the California State Teachers’ Retirement System about $210 million for the Rancho Pacifica Industrial Park. The complex totals nearly 1.2 million square feet – about $180 a square foot – on 56 acres. The Rancho Dominguez property, considered Class A for industrial users, is fully leased, with 23 tenants.

Tenants have signed leases that run, on average, 25 percent below current market rates. Rexford will have a chance to set new rates in coming years, with about three-fourths of leases set to expire by the end of 2020.

The deal brings Rexford’s outlays for infill industrial property in Southern California to $500 million so far this year.

Editor Jerry Sullivan contributed to this week’s real estate column and can be reached at or (323) 549-5225, ext. 200.

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