The Frank Gehry-designed Grand LA is a prominent mixed-use development in downtown Los Angeles that sits across from the celebrated Walt Disney Concert Hall (which was also designed by Gehry). Developed by Related, the project occupies an entire city block and contains a 305-room hotel by Hilton, 347 luxury rental apartments, 89 affordable apartments, and over 164,000 sf of retail space.

According to Bloomberg, most of the project is doing quite well. The hotel occupancy rate is at 69%, the hotel restaurant is busy, and the residential is more than 95% leased. The problem is the retail.

Since the project opened in 2022, most of it has gone unleased. Though two new anchors were just announced: an AI museum called Dataland and a permanent home for the University of Michigan's Ross School of Business, which runs an executive MBA program in LA.

But these aren't traditional retail tenants. And it's almost certainly not what was being modeled when the project broke ground in 2019. Back then, everyone was still going into the nearby offices. And those humans would have brought foot traffic. This is one of the tricky things about development — you end up building through different macro environments.

But even in the best of times, it's generally hard to say with exact precision what will be successful. That's development. If there's comparable product, then you can comp against that (less risk). But if there isn't (more risk), you're faced with the question: Does comparable product not exist because there's no market for it, or does it not exist simply because nobody has done it yet?

If you're developing, it's because you believe the latter.

Cover photo by Spiwok V on Unsplash

About five years ago, a project in downtown Los Angeles, called Oceanwide Plaza, halted construction. I don't know exactly what happened, but the reports suggest corruption, financing problems, and the Chinese developer running out of money.

Under typical circumstances, once you secure your financing and start construction, it should mean that you have enough money to finish the project. That is unless there are significant cost overruns, you experience a cash crunch somewhere else, and/or somebody does something bad.

In fact, on some projects, the peak equity requirement occurs before construction commencement, meaning that once you do secure your construction facility, you should be able to reduce the amount of equity that you have remaining in the project (i.e. you can pull out some cash).

Here it sounds like a combination of things went sideways. And now today, Oceanwide Plaza looks like this:

The towers have been tagged pretty much all the way up. And it kind of looks like each artist commandeered their own suite in the building. Not surprisingly, this has been attracting a lot of attention and debate. The project is also across the street from the Crypto.com Arena and so there are a lot of eyeballs on it.

On the one hand, you have artists being creative and doing something with an abandoned set of buildings -- ones that are beset with corruption charges and that people are generally upset about. But on the other hand, you have a busted project, and you have artists trespassing and creating what others see as another symbol for a spiralling downtown.

LA police are reporting that the site is going to be better secured and that all of the graffiti will be removed. But until then, this has got to be one of the tallest expressions of graffiti ever created.

The New Yorker recently published an interesting split-screen video tour of the same streets in downtown LA in the 1940s and today. 

They have done a great job pairing up the same views and also panning in such a way that the middle divider seems to magically transport you 70 years.

Here it is:

[youtube https://www.youtube.com/watch?v=WIHfmisMLOY?rel=0&w=560&h=315]

If you can’t see the video above, click here.

In some cases (okay, many cases), I couldn’t help but feel like 1940s LA was far more urban and engaging. What did you think?

The Frank Gehry-designed Grand LA is a prominent mixed-use development in downtown Los Angeles that sits across from the celebrated Walt Disney Concert Hall (which was also designed by Gehry). Developed by Related, the project occupies an entire city block and contains a 305-room hotel by Hilton, 347 luxury rental apartments, 89 affordable apartments, and over 164,000 sf of retail space.

According to Bloomberg, most of the project is doing quite well. The hotel occupancy rate is at 69%, the hotel restaurant is busy, and the residential is more than 95% leased. The problem is the retail.

Since the project opened in 2022, most of it has gone unleased. Though two new anchors were just announced: an AI museum called Dataland and a permanent home for the University of Michigan's Ross School of Business, which runs an executive MBA program in LA.

But these aren't traditional retail tenants. And it's almost certainly not what was being modeled when the project broke ground in 2019. Back then, everyone was still going into the nearby offices. And those humans would have brought foot traffic. This is one of the tricky things about development — you end up building through different macro environments.

But even in the best of times, it's generally hard to say with exact precision what will be successful. That's development. If there's comparable product, then you can comp against that (less risk). But if there isn't (more risk), you're faced with the question: Does comparable product not exist because there's no market for it, or does it not exist simply because nobody has done it yet?

If you're developing, it's because you believe the latter.

Cover photo by Spiwok V on Unsplash

About five years ago, a project in downtown Los Angeles, called Oceanwide Plaza, halted construction. I don't know exactly what happened, but the reports suggest corruption, financing problems, and the Chinese developer running out of money.

Under typical circumstances, once you secure your financing and start construction, it should mean that you have enough money to finish the project. That is unless there are significant cost overruns, you experience a cash crunch somewhere else, and/or somebody does something bad.

In fact, on some projects, the peak equity requirement occurs before construction commencement, meaning that once you do secure your construction facility, you should be able to reduce the amount of equity that you have remaining in the project (i.e. you can pull out some cash).

Here it sounds like a combination of things went sideways. And now today, Oceanwide Plaza looks like this:

The towers have been tagged pretty much all the way up. And it kind of looks like each artist commandeered their own suite in the building. Not surprisingly, this has been attracting a lot of attention and debate. The project is also across the street from the Crypto.com Arena and so there are a lot of eyeballs on it.

On the one hand, you have artists being creative and doing something with an abandoned set of buildings -- ones that are beset with corruption charges and that people are generally upset about. But on the other hand, you have a busted project, and you have artists trespassing and creating what others see as another symbol for a spiralling downtown.

LA police are reporting that the site is going to be better secured and that all of the graffiti will be removed. But until then, this has got to be one of the tallest expressions of graffiti ever created.

The New Yorker recently published an interesting split-screen video tour of the same streets in downtown LA in the 1940s and today. 

They have done a great job pairing up the same views and also panning in such a way that the middle divider seems to magically transport you 70 years.

Here it is:

[youtube https://www.youtube.com/watch?v=WIHfmisMLOY?rel=0&w=560&h=315]

If you can’t see the video above, click here.

In some cases (okay, many cases), I couldn’t help but feel like 1940s LA was far more urban and engaging. What did you think?