What makes LA such a unique global city?
As the global center of entertainment, Los Angeles is familiar to even those who have never cruised the freeways crossing its infamous urban sprawl
Its palm trees, beaches and eminently Instagrammable neon signs have formed the iconic backdrop to scores of films and TV shows.
And its showmanship will once again be on global display when it hosts the Olympic Games in 2028.
“LA has a highly creative economy that is also extremely diversified,” says Henry Gjestrum, Senior Analyst Office Research, JLL. “The entertainment industry is a very significant part of that, of course, but LA is also known for its strong entrepreneurial base.”
Buzzing for business
Along with government incentives for start-ups and a large network of funding opportunities for small businesses, LA’s many thriving industries attract a diverse and creative pool of talent.
The restaurant scene has long been heatedly compared with New York City for America’s best, while the flourishing contemporary art scene has been bolstered by numerous museum openings in 2017. Its emergence as a fashion capital has also lured modern and established designers, including the relocation of Saint Laurent from Paris in 2012.
LA’s cultural clout is such that new-generation media companies are moving in to be a part of the buzz. “We have seen a morphing of our traditional entertainment sector, driven by technology companies such as Netflix and Hulu setting up shop here. These companies are producing their own media, and they want to tap into our infrastructure and deep base of talent,” says Amber Schiada, Senior Director, Research, JLL.
As technology businesses eschew the crowded echelons of Silicon Valley for sunny spaces in LA’s emerging Silicon Beach, the city’s established sectors continue to contribute to its booming economy too. “Where New York is a mature economy for finance, LA has the benefit of mature economies in aerospace, oil, tourism and shipping, which have all been amping up,” Gjestrum says.
Investors are well aware of its credentials. The city is frequently among the top U.S. contenders for foreign real estate investment against the ballooning markets of New York City and San Francisco. “In comparison, LA seems reasonably priced,” Schiada notes.
Immigration from many countries, one of the defining characteristics of the vibrant and fast-moving city, has been a positive driver for the real estate boom, says Gjestrum. “We have large Korean and Chinese communities, for example, that encourage a lot of foreign investment,” he says.
Part of the attraction to investors also lies in the swathes of urban space with vast opportunity for redevelopment. Once a rundown neighborhood with abandoned buildings, the downtown area is currently being revitalized in the biggest building boom since the 1920s, with Chinese developers pouring over $4 billion into luxury hotels and apartment towers.
The Olympics is also driving regeneration. As preparations move off the drawing board in the coming years, city officials are fast-tracking plans to bolster urban infrastructure before hundreds of thousands of visitors descend upon its developing public transport system and formidably congested roads.
Last year Angelenos voted to pay more tax to be funnelled into what has become one of the country’s largest local transportation funding streams. This boost to transport spending will go into the metro system, developing links between unconnected areas such as Mid-Wilshire, Century City and Westwood where the University of California, Los Angeles is based.
“The hope is that these investments into the metro system will lessen traffic. As the city continues to grow, we’re playing catch up in educating a car-centric population to use public transport,” says Devon Parry, Senior Research Analyst, JLL.
A project is also underway to modernize LA’s International Airport, which is the fourth-busiest in the world by passenger volume, but was last year voted one of the worst airports in the world for long delays, lengthy security lines and congestion in the roads surrounding the airport. Similar investment is going into its two ports, Long Beach and Port of Los Angeles, which together make LA the busiest seaport in the western hemisphere.
Connecting the different regions of the LA sprawl could be the catalyst for a new, more sustainable — and attractive — mode of urban growth. “This massive metropolitan area with different local markets and no clear center is something that can be difficult for investors to wrap their heads around,” Parry says.
The forthcoming metro links are already creating opportunities for real estate developers – as the city looks to move away from being a commuter market where people drive endlessly, Gjestrum says. “One trend we’re starting to see is that people — and businesses — are clustering in areas by industry,” he explains. “People are definitely tired of the commute and looking for alternatives, so companies are trying to base themselves where their talent is.”
Take the downtown area — this central business district is now attracting numerous new residential developments. “Developers see a huge opportunity in LA, which is a vote in confidence in LA’s future, driven by the assertion that LA is a rising city,” Schiada says.
Hosting the Olympic Games is another sign of confidence as LA looks to boost its brand on the world stage — and 2028 will mark the third time LA has played host. “The infrastructure to host the games is already here, so this time around, the ultimate benefit will be more about focusing attention on LA globally,” says Gjestrum. With many years to prepare, Los Angeles should be more than ready for its close-up.