The Future of Downtown Long Beach: Part 2
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From the '60s to the '90s, people left Long Beach for Orange County. Now emigres' kids are moving back, and investors are laying down major capital to accommodate.
Milan Capital Management president Chris Nichelson (right, with Balboa Financial's Michael Montoya), who spoke at our Future of Downtown Long Beach last week, talked about Downtown Long Beach's tremendous value proposition for both residents and property owners. It's one of the most affordable places to live in coastal SoCal, he says, and you can buy property at attractive yields for almost every product type. Additionally, Long Beach is the most developer-friendly city he's worked in--they'll tell you yes way more often than they'll tell you no, he says.
Noting that Long Beach is getting its share of Millennials, Ratkovich Properties president Cliff Ratkovich discussed Downtown's emerging demographics and pent-up demand. According to Cliff, 70% of new Downtown residents earn $50k to $100k per year, and an additional 20% pull down $100k to $150k. But only 2.5% of Downtown workers actually live there. That's one of the reasons why institutional capital and large private equity players have Downtown Long Beach on their radar screens, he says.
AndersonPacific EVP Ryan Altoon is under construction on The Current, a 223-unit luxury apartment project with 7k SF of ground-floor retail. When the company entered Downtown Long Beach 10 years ago, it was one of about 15 high-rise towers slated by Class-A developers (think Williams & Dame, Forest City and Related). Then came the Great Recession, but once the former redevelopment agency-owned land in the urban core gets worked out, he predicts you'll again see a renaissance in Downtown Beach.
Millworks managing partner Michelle Molina (right, snapped with JLL's Janice Cimbalo), says the company's projects include the redo of a 2.5-acre site on North Pine Avenue. Of the five buildings on the site, three were demolished and the other two, one of which was historic, are adaptive reuse. Millworks also develops office space for Molina Healthcare, predominantly for the company's IT department. Michelle says she noticed the residential base was growing when the first two retailers to come into downtown after the recession were pet-related.
John Hancock Real Estate regional leasing director Parker Jones (right, snapped with Belmont Partners' Matt Homer) says the company, which owns the 440k SF Landmark Square office tower, regards Long Beach as a sustained, long-term investment. Downtown boasts a number of fundamentals that are unique to this market, he says, including a user-friendly city and the dynamic between the retail and the emerging residential growth. Parker says a new restaurant, Pier 76, opened at Landmark Square about six months ago; at lunchtime, people are lined up to get in.
Our moderator, Michael Bohn, principal and design director of Studio One Eleven, kicked things off with a little history on Long Beach's evolution from a seaside resort town into an urban core, initially fueled by energy, the Port and the Balboa movie studio. (No, that's not where Rocky was filmed.) The '60s brought a decline in Downtown as people moved out to the suburbs. In 2007, his studio worked with key stakeholders on a visioning study for Downtown. They wanted increased density, increased height and more transit focus.
Our panelists talked about the City's revised Downtown Plan, which got its cues from the above-mentioned visioning study. Cliff says that by applying pre-approved zoning and CEQA overlays to virtually every parcel Downtown, the plan takes entitlement risks off the table. It created the ability to begin demolition and construction of his current project, The Edison (156 apartment lofts plus ground-floor retail) in less than six months from date of acquisition. Michelle says her 200k SF project was the first to test the Plan's blanket EIR; she delivered the project five months early and $250k under budget. Having seen the process before and after the Downtown Plan, Ryan says thoughtful and pragmatic elements include shared parking--understanding when different uses come into play--and incentivizing good behavior such as sustainability.
Michael asked whether Downtown's market segment focus includes the "creative class." Chris recently decided to convert 200 W Ocean Blvd, where our event was held, into creative office space. A number of creative tenants are in active negotiations, he says. (CBRE's Dave Smith, above with Bantry Holdings' Beth Sydow-Peterson, is one of 200 W Ocean's leasing agents.) Parker says John Hancock has had a positive response to the idea of creative space in Class-A office buildings, including in Long Beach, where existing tenant Occidental Petroleum recently expanded. Oxy replicated the creative design concept in its expansion, he says.