Rental rates for the first quarter were up 1.7% to $2,514 compared to the fourth quarter, while the occupancy rate reached 85.9%, up 1.6% over the same period, according to a study by the Downtown Center Business Improvement District.
While year-over-year figures for the first quarter show a decline — the average rate per unit was $2,663, and the occupancy rate was 87.6% in 2020’s first quarter — DCBID Executive Director Nick Griffin said quarter-over-quarter data gives a more accurate picture.
“It’s more of an apples-to-apples comparison than comparing it to last year, pre-pandemic,” Griffin said. “What we’re focused on in terms of the residential numbers and office leasing and construction and retail openings is quarter-over-quarter momentum and how are we doing coming out of this. By that method, we are doing very well.”
He added that “the myth that urban living has lost its luster is a fallacy.” He said he expects to see interest reignited in an area like downtown that offers nightlife, culture and restaurants.
The downtown area has been a hotbed of multifamily development. In the late 1990s, there were only 2,426 units of market-rate rental units in the area. There are now 30,335 units, with an additional 2,952 under construction and 23,635 units proposed.
There are also 12,290 units of affordable housing in the market with 661 under construction and 2,792 proposed, according to DCBID.
Griffin said developers look a few years out when planning projects, and the numbers show they are still betting big on downtown for the long haul.
“The bigger picture in the longer term is a top urban center like downtown has not lost its luster. It is going to return to the momentum it had prior to the pandemic,” Griffin said.
Developers, he added, will benefit from the city’s housing shortage. The housing shortage means that there will be continued demand for additional housing units.
Some big projects opened in the area in the last few months, including the 35-story Perla on Broadway, a 450-unit condo tower at 400 S. Broadway.
Standard Development, meanwhile, has delivered HWH Luxury Living. The project is a revitalization of the Hellman Building with 188 apartments and roughly 20,000 square feet of retail space.
Projects that are under construction now include The Grand, a $1 billion development from Related Cos. that will have 400 residential units, a hotel and retail space. And Brookfield Property Partners is building out 945 W. 8th St., which will stand 64 stories tall and have 784 residential units.
In addition, there have been several large multifamily sales in the downtown area in the past few months. The largest was the 293-unit Olive DTLA, which sold in January to Waterton Associates for $121 million.
“There’s still a huge amount of institutional money flowing into real estate, and multifamily is a solid investment for those folks,” Griffin said. “Investors continue to see opportunity and value. That’s across sectors but particularly in residential. You had very strong demand filling up new projects prior to the epidemic, and the fact that that stayed relatively stable during a historic crisis and is now only one year later beginning to tick back up again is a pretty clear indication of long-term strength.”
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