Experts Explain Why Investors, People Drawn To LA's Eastside
In 2011, on the same week his company closed on a 55-unit multifamily building in Angelino Heights — a neighborhood in between Echo Park and Chinatown — someone was fatally shot in front of the building.
“We knew nothing of Angelino Heights,” Weller told a crowd at Bisnow’s The Future of the Eastside of Los Angeles at the Omni Los Angeles Hotel.
At the time, Angelino Heights had a reputation as a crime-ridden area.
“Right when we took over the project … someone was shot in the head in front of the building and killed,” Weller said. “Mory [Barak, my partner] and I looked at each other and were like, 'What the hell have we done? What’s this area?'”
Those ominous beginnings didn’t last long.
Fast-forward several years later, Angelino Heights and the Eastside are safe and fast becoming among the hippest places to live and work, Weller said.
“The tenant base is very bright. It’s just a different group. It’s been very good to us,” Weller said, referring to the firm's investments in the area.
Weller was among the panelists who spoke to more than 150 people at the event, where panelists discussed the history of the Eastside, why they invested in the neighborhood and how quickly certain neighborhoods have become popular investment opportunities.
The Eastside of Los Angeles, including Boyle Heights and Lincoln Heights, and surrounding neighborhoods such as Westlake, Silver Lake, Atwater, Echo Park and the Arts District and, further northeast, Eagle Rock and Highland Park, were known more for their poor reputation than as a nice place to settle down.
Historically, property prices and rent in the Eastside were more affordable than on the Westside and in downtown Los Angeles. The Eastside of Los Angeles attracted mostly immigrants, minorities, working-class people and artists.
“There are a great stocks of buildings, generally cheaper and cater to artists, and I think we’ve seen an amazing and rapid transformation of the Eastside,” Industry Partners partner Carle Pierose said.
Weller said the area began to transform shortly after the recession.
The Los Angeles Police Department stepped up its gang enforcement, cleaned up some neighborhoods and investments started to pour in.
"Coming out of the recession, there was a lot of capital and people saw this as a fantastic area because of its proximity to downtown Los Angeles," Weller said after the event.
Once people began to feel comfortable moving in, businesses followed.
Figure 8 Realty Director of Commercial Real Estate Nick Fichera said several media, television, streaming and movie production companies are setting up shop.
He has seen businesses relocate to the Eastside or an adjacent neighborhood when their leases are up on the Westside, in Hollywood or even the Arts District. They are making the move rather than continuing to pay the high rents. Some established companies have even bought their own buildings and converted them for creative office.
Fichera said while some neighborhoods, such as Silver Lake, Sunset Boulevard and Koreatown, have office leases and property prices on par with Hollywood, there are still a lot of areas that can be had for a discount.
Weller said he became sold on the Eastside after that initial multifamily investment in Angelino Heights.
His company took over a foreclosure and after putting in about $5M to upgrade the building, he was surprised by the tenants the property attracted.
Several actors, graphic designers and artists were signing leases.
“They didn’t want to live in West LA,” Weller said. “They wanted to live in Echo Park or near Silver Lake and we were getting big rents, about $2,200 or $2,300 for one-bedrooms. We didn’t have a pool. We had a small gym ... people loved it.”
Most of the new tenants on the Eastside are millennials. They don't want material things, they are looking for an authentic experience, he said.
"There is not a fear of living in areas that are gritty," Weller said.
Since that initial investment his company has invested in about $150M worth of commercial properties in the Eastside, including the Arts District, he said.
Three6ixty Managing Partner Dana Sayles said the charm of living in the Eastside of Los Angeles is that it is completely different than the Westside. Sayles' company invests in multifamily products in the northeast of Los Angeles.
"People do not want to live in Westside-styled buildings out here," Sayles said. "For all of you doing developments out here, get a different architect. The people here do not want to see the same old building that can be seen in West Hollywood, in Glassell Park. They want to see buildings with character, culture and creativity."