These are busy days for the leading commercial real estate developers in Los Angeles. The 25 largest developers reported a combined 6.7 million square feet under construction this month, an increase of 77 percent over January 1997.
The lowest office and industrial vacancy rates in years have made it economically feasible again to invest in new construction, particularly in such tight office markets as the Tri-Cities region of Burbank, Glendale, and Pasadena. In Glendale and Burbank, the first major office developments in L.A. County in more than five years broke ground last year. PacTen Partners and Morgan Stanley & Co. were the first to take the plunge by starting construction on a 24-story, 500,000-square foot office tower in Glendale.
Although things are better than they were, new retail construction in Los Angeles last year was only 0.9 percent of the total amount of existing retail space, the third-lowest ratio of the nation’s major markets. By comparision, 2.8 percent of the retail space in Orange County is new construction.
Majestic Realty Co. remained the largest commercial real estate developer in Los Angeles County. Even though much of the company’s current development takes place outside of L.A. County, in such places as the Inland Empire, it is in the process of adding a new jewel to its crown in the form of the sports arena downtown. The arena, to be called Staples Center, will be the home of the Lakers basketball team and the Kings hockey team, starting with the 1999 season.
The L.A. Arena Development Co. LLC, which will build the arena, and the L.A. Arena Co. LLC, which will own and operate the arena, are both co-owned by Denver billionaire Philip Anschutz and Edward P. Roski Jr., owner and president of Majestic. The same men also own the Los Angeles Kings. The 900,000-square-foot stadium, which will seat 20,000, will cost an estimated $300 million to build.