Just one month after its official opening, the $274 million Walt Disney Concert Hall in downtown Los Angeles already is being hailed as a major magnet for new real estate projects.
“The downtown market is hotter than a firecracker,” says O'Malley Miller, a real estate attorney with Munger, Tolles & Olson who worked on the Disney project for 11 years. “This is a function of a whole bunch of residential units being built and a new cathedral [Cathedral Of Our Lady of the Angels] as well as the Staples Center located just a few blocks from the Disney Hall.”
The Los Angeles Grand Avenue Authority announced just days after the hall's official opening in late October that it is soliciting development teams for four parcels totaling eight acres in addition to a 16-acre civic park across the street from the sprawling 3.6-acre complex designed by world-renowned architect Frank Gehry.
Created by a joint venture between the city and county of Los Angeles, the Grand Avenue Authority says its new development is one of the nation's best urban real estate investment opportunities — 3.2 million sq. ft. of commercial and residentialadjacent to the concert hall in an area known as Bunker Hill.
This brings to 9,000 the number of downtown housing units in the development pipeline with total local investment estimated at $1.7 billion, which analysts believe could have a potential local economic impact of twice that amount.
Martha Welborne, managing director of the Grand Avenue Committee, a non-profit development agency working with the city-county authority, says rave reviews for the concert hall's stunningprovide a “built-in base to support a superb high-density, mixed-use development.”
Welborne says the entire Grand Avenue project will cost $1.2 billion. That figure is separate from the Disney Hall, which was financed by county funds and private donations. Of this total, approximately $300 million will go for public infrastructure improvements, and approximately $900 million for real estate development. The project will create more than 16,000 long-term jobs, Welborne says.
Described as a futuristic rendering of a ship's sails, the Disney Hall is a major part of the city's efforts to revitalize downtown with the type of project that can attract such spin-off businesses as restaurants, retail stores and professional services firms.
City leaders say developing an image as a mecca for high culture underscores the seismic shift in attitudes about downtown Los Angeles, adding that there now will be six performing arts centers on a short stretch of Grand Avenue.
Jack Keyser, chief economist with the non-profit Los Angeles Economic Development Corp., says downtown real estate values could soon begin rising. Monthly rents for Class-A office space are currently $2.27 per sq. ft., essentially unchanged from last year. By comparison, Class-A office space in downtown San Francisco, still struggling with the dot-com downturn, can be rented for half that amount.
“You have Class-A space downtown that you can't reproduce anywhere else in the area,” Keyser says. “Two years from now, a lot of investors are going to say, ‘I wish I'd gotten here sooner.’”