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Originally Posted by 202_Cyclist
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I too appreciate that zonedgreg gives details on what's going on. I think too many fans of highrise devlpt....esp in dtla....ignore that the pieces of the puzzle need to fit together. Or they hope that new devlpt is a matter of "build it & they will come".
Forgetting the history of dtla since the 1940s, if not longer, sets up a person for disappointment...discounting the law of economics sets up a person for a lot of 'how come?!' That's even truer if a person believes every new proj in dt should include ground floor retail....as though customers for such spaces will magically appear. Or that dtla's weakness in leasing office space for decades or negative news about dt going back to the 1950s, including the recent incident of a boy being stabbed at Fig at 7th, won't scare off potential investors.
This is the telling quote in the article you linked to. Dtla hasn't easily filled commercial space as it should have for over 30 yrs, whereas West LA, such as around century city, has. That's one reason why a new office tower is going up in CC, while existing office space in dtla goes begging. DTLA doens't have things like Conde Nast, etc. Economics, ppl.
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This strategy has worked for some developers in past downturns. The Durst Organization in New York famously built a 52-story tower in Times Square during the recession of the early 1990s without preleasing and signed Condé Nast Publications before it was completed.
But high interest rates and rising building costs in the current market have put a new wrinkle in this strategy. Even if developers are able to attract tenants to their new buildings, they might not be able to get the rents they need for their investments to pay off, some analysts say.
“History shows there is likely to be good demand for new and high-quality office space,” said Danny Ismail, a senior analyst at real estate analytics firm Green Street. “But will demand be there at the rents needed to justify those developments?”
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The long unfinished Oceanwide proj on Fig is a daily reminder of how economics are at the root of most things....affected by LA city hall & other influencers in the city.
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