News for Investors: Downtown Los Angeles Is Changing

Architects, designers, builders, the mayor of Los Angeles and its fans have long known this fact: Downtown Los Angeles has finally reached its popularity spin. Buyers are coming to the same conclusion: Downtown LA is the most undervalued major city on planet Earth.

Well, actually downtown LA has been doing wondrously since 1995 during which time the Community Redevelopment Agency of the city of Los Angeles undertook to level homes and clear land for future commercial skyscraper development. This period saw the clearing and upzoning of the entire neighborhood, more department stores on Broadway shuttered, and many of Downtown LA’s remaining financial corporations moving to vacant Class A office space on Bunkers Hill.

In mid-2013, Downtown was noted as “a neighborhood with an increasingly hip and well-heeled residential population.” It started attracting, too foreign millionaires – mainly from China – who rushed to invest in it, sometimes with cash down. Downtown Los Angeles is the central business district of Los Angeles, as well as a diverse residential neighborhood of some 50,000 people at this time of writing. A 2013 study found that the district is home to over 500,000 jobs. Wikipedia mentions that the district declined economically and suffered a downturn for decades until the early 2000s. Now, construction is brisk. Old buildings are being modified for new uses, and skyscrapers have been built. Downtown Los Angeles is known for its government buildings, parks, theaters and other public places.

In 2013, a study by Downtown Center Business Improvement District (DCBID) showed that of the 52,400 people resided in Downtown Los Angeles, the demographic breakdown was 52.7% Caucasian, 20.1% Asian, 17.0% Latino, and 6.2% African-American; 52.9% female, 47.1% male; and 74.8% of residents were between the ages of 23-44.The median age for residents was 3. The median household income was $98,700. The median household size was 1.8. In terms of educational attainment, 80.1% of residents had completed at least 4 years of college. The study was a self-selecting sample of 8,841 respondents across the Downtown LA area. It was not a “census” but rather a comprehensive survey of Downtown LA consumers.

More recently, Downtown LA has attracted a yuppie New York commercial sector that is all too keen to stake out ground for its projects.

The latest news is that a British firm plans to remake a historic downtown LA building into its own.

Hoxton and Los Angeles

Hoxton is a British hotel operator that – breaking news! – just today (29th Dec) purchased a historic building in downtown Los Angeles for $30 million and plans to transform the decaying structure into a hip, stylish hotel, according to JLL, the brokerage involved in the deal.

Hoxton owns hotels in London and Amsterdam and plans to open another in New York and one in Paris next year. The fact that it chose LA – downtown for that – tells something significant about the area’s growing appeal.

Hoxton describes its brand as the “anti-hotel,” where travelers find not only a bed, but “a place where people could eat, drink, work and play anytime of day.” Its character is indicated by the description given it by the British newspaper, The Independent, that called Hoxton’s Amsterdam outpost “an almost painfully trendy hotel in the Netherlands’ hippest city.”

Downtown LA seems to be perfect for it.

JLL has described downtown Los Angeles as the area where people look to eat, live and work. It is a trendy area with a diverse residential neighborhood of some 50,000 people at this time of writing. According to a map from JLL that tracks millennials and baby boomers, Downtown Los Angeles outnumbers baby boomers by 10% in a consumer market. In most of the industry markets in Los Angeles, the breakdown is 25% millennials to 21% baby boomers. Says Sara Lo, a senior manager specializing in the hospitality business at consulting and accounting firm Ernst & Young.”Downtown is thriving and international companies are all taking note”

Finally.

The area’s hotel market has long been dominated by corporate giants catering to business travelers. Tourists flocked to West Hollywood or beach communities such as Santa Monica and Marina del Rey. The city area was once derided as a ghost town after five, but is now home to a bustling restaurant and bar scene. Developers sketch pages of small “lifestyle” boutique hotels – ones with uniquely designed rooms and high-end food and nightlife offerings. And a recent Los Angeles Times commented that the investment is the latest sign that the neighborhood’s renaissance has created a place where tourists, not just business travelers eyeing a comfortable environment, want to lay down their heads. Proof: money’s coming from overseas now. Worldwide investors value the place too.

A Hoxton hotel at 11th Street and Broadway would join several others nearby.

Just across the street will come the 148-room Downtown L.A. Proper Hotel that will situate itself in a vacant building running from the 1920s. Two blocks away is the popular Ace Hotel, a boutique that opened last year in the historic United Artists building and is credited with drawing more investment to the area.

Even big chains are chiming in.

A Hotel Indigo, a hip brand operated by InterContinental Hotels Group, is under construction as part of a Chinese company’s $1-billion Metropolis development near Staples Center.

The downtown market is strong – with a 77% occupancy rate that outperforms the 75% average for the nation’s top 25 markets, said Lo. Some are predicting an imminent threat of overbuilding, but designers don’t want to think about that. Ernest Wooden Jr., president of the Los Angeles Tourism & Convention Board, encourages the momentum. Says he: “The projects currently underway are critical to our long-term ability to attract both leisure and business travelers,” he said in a statement.

Areas around 11th and Broadway that saw little investment in the past are now steaming up and several residential complexes are underway, including roughly 650 apartment units from luxury developer Geoffrey Palmer. New York developer Georgetown Co. announced in September a $40-million project to redevelop the historic Herald Examiner building into creative offices and ground-level restaurants. Several buildings on Broadway are decrepit and have been empty for decades. Others are chipped, lined with graffiti, bent double under crumbling ceilings and bruised with chipped paint. No matter: they’re being dismantled with unhesitating speed.

What with New York yuppies, British, local and expatriate buyers staking their plots in the region, downtown Los Angeles has come along way from its tottering steps in the early 19th- 20th century. It has become an area to be reckoned with.

And local commercial hard money lenders are there to help investors. See http://www.HMLInvestments.com for more details.

Downtown Memphis Hotels

The following are some of the best hotels in the attractive and historically rich downtown area of Memphis.

The Residence Inn Memphis Downtown is situated in downtown Memphis. Nearby attractions include the Mud Island River Park, Mississippi River Museum, the Orpheum Theatre, and the Memphis Rock ‘N’ Soul Museum. The Residence Inn offers several facilities, including safe deposit boxes, guests’ dry cleaning services, laundry facilities, and high-speed Internet access. The mezzanine and lobby are breathtaking, with original architectural features still intact. The elegant hearth room has an unconventional double-faced fireplace, and is positioned close to the billiards room. Guests wake up to a continental breakfast. A high-end business center caters to the needs of the businessman. For functions, the hotel has two conference rooms complete with all the requisite facilities. Though it does not have its own restaurant, there are several in the vicinity offering fine cuisine and competent services. Room amenities include coffee makers, irons and ironing boards, hair dryers, and cable television.

SpringHill Suites is conveniently situated less than a mile from Peabody Place, Beale Street, and the Orpheum Theatre. Also nearby are Graceland, Mud Island River Park, St Jude’s Hospital and the brand new Fed Ex Forum. The hotel has convenient and quality accommodations, such as a pantry area with refrigerator, coffee maker, microwave, and living area with a sofa-bed. SpringHill Suites also offers a complimentary buffet breakfast.

The Comfort Inn Downtown is an ideal choice for business travelers and family vacations. The hotel overlooks the Mud Island River Park and the Mississippi River. The Comfort Inn Downtown has a great location. It is close to the Memphis Cook Convention Center, FedEx Forum, Peabody Place and Beale Street. Facilities include high-speed Internet access in all rooms, as well as copy and fax services. The meeting facility is spacious, and perfect for business presentations, family reunions and social gatherings. Apart from conventional amenities, guest rooms offer irons and ironing boards, and coffee makers. Some rooms have refrigerators. The Business Class Suites have refrigerators, wet bars, microwaves, two-line telephones and VCR.

Other downtown hotels include the Memphis Marriott Downtown, Doubletree Hotel Memphis Downtown, and Holiday Inn Select Memphis – Downtown (Beale Street).

Saving a Ton on Traffic – Best Deals Aren’t Downtown

 Downtown is the trendy place to be.  No matter what city you live in or near, the downtown area is where everything is concentrated.  You have businesses, clubs, restaurants, activities, stadiums, events- everything you could possibly want is downtown.  Because downtown is so central and so concentrated, it’s where everyone wants to be- including data centers and collocation facilities.

The High Price of Downtown
 
But downtown comes with its own host of problems.  The main disadvantage of downtown is the high cost of real estate.  Everyone wants to be there.  And because of this, companies have to pay a premium to locate downtown.   If rents rise, people are either forced to pay higher rent or leave the location that they perceive to be prime.
 
Unfortunately, this doesn’t help the consumer, especially when it comes to data centers and colocation.  Because these facilities are so specialized and require so much energy, power and infrastructure to run, they’re not likely to move locations if rents are raised too much.   In fact, it would be a disadvantage for downtown data centers to do so because of the costs associated with moving an entire data center and the inconvenience it would cause for the customers.
 
So, when rent goes up, colocation facilities are forced to pay.  In order to make up the costs, prices are raised or services are cut in order to maintain the same margin.
 
The Best Deals Aren’t Downtown
 
If you’re looking for the best deal on colocation, downtown is not the place to look.  The farther away you get from the city, the less expensive real estate is.   There are many reasons for this, but the point is that data centers don’t have to pay the high premiums for real estate.  Without these excess costs for rent, facilities are able to pass these savings onto customers.  Not only can they offer cheaper prices per rack, but they can also include more bandwidth and more services.  By locating away from downtown, you’ll get at least the same quality of service and in many cases you’ll get better service without having to pay the high prices that you do downtown.  
 
A sample price comparison of a facility located just outside the city center and a facility located right in the heart of downtown is as follows:
 
Downtown facility-

 ½ Rack- $650 (Does NOT include traffic)

Full rack- $1200 (Does NOT include traffic)
 
It is not possible to rent space in any smaller amounts.  It’s pretty much all or nothing, which doesn’t accommodate the needs of smaller businesses or allow for gradual expansion.  Other services include a power generator (which belongs to the building and therefore they don’t have complete control over its usage) and 100mps ports.  
 
Facility near, but not in, downtown-  
 
1/8 Rack- $175 (includes 50 GB traffic)

¼ Rack- $350 (includes 200 GB traffic)

½ Rack- $500 (includes 350 GB traffic)

Full rack- $900 (includes 800 GB traffic)
 
Other features include a power generator which is owned by the company allowing more control, owning their own facilities, 100 mbps ports and free internal traffic with an internet account.  
 
Savings Passed on to You
 
As you can see, facilities that are not located downtown can afford to pass on the savings to customers.  Not only is it less expensive to rent a rack, but it also comes with more features, such as included traffic and free internal traffic.  Not only that, but hosting away from downtown will save you on other costs you may not even have thought of such as not having to pay for parking.  All-in-all, regardless of where you’re located, it’s always much cheaper to host your servers outside of downtown than it is to host them right in the heart of downtown.