The just-south-of-the-Arts-District real estate market in Los Angeles is white hot right now. Properties went from trading hands for an average of $242 a square foot in the first three months of 2015 to averaging a robust $655 a square foot last month, says the LA Business Journal. The area in question, which extends from Seventh Street down to the 10 Freeway, is a newly desirable commodity thanks in very large part to the forthcoming Soho Warehouse, the forthcoming location of the London-based private club (which already has a branch in a Sunset Strip penthouse).
Soho's being seen by some as a pioneer that will lead the neighborhood's transformation into a super-fancy area like the nearby South Park (home of LA Live and expensive condos); it already instantly changed the real estate market on surrounding blocks. "It had an almost immediate impact on asking prices," a principal with the real estate firm Avison Young told LABJ. "People were saying, 'Soho is coming.' I started to see interest from tenants who were a safer bet for the Business District say, 'I only want the Arts District."
The sudden desirability of the neighborhood bit Soho House back; when they tried to buy a lot near the warehouse to use for parking, they were quickly outbid. In at least one case, concerning three office properties snapped up on Santa Fe Avenue near Ninth Street, the per-foot prices even surpassed the average per-square-foot prices that tony Beverly Hills commands.
Whether these prices will hold high or dip remains to be seen. Some feel that Soho's arrival is enough to keep prices up, but several real estate experts warned that property owners "who flip in the next two years will do well," but that anyone who holds on longer than that risks getting stuck with hard-to-offload land. One anonymous "industry expert" advised that "The big retail complexes need to fill up with tenants in order for residential builders to fill up their buildings and command higher rents."
The Soho House, which has annual fees of $2,000, is definitely going to attract a moneyed crowd to the area with its six floors of lavish fun, including a rooftop pool, a giant food hall, and a basement music venue. It's also being developed by Jon Blanchard of BLVD Hospitality, who was the lead developer on the Ace Hotel on Broadway—also seen as a sort of trailblazer for DTLA, and one that, with carefully calculated planning, brought a lot of high-end retail (and wealthier people) to that section of Downtown.
· How Club's Hype Pushed Prices Up [LABJ]
· What They're Putting On Every Floor of the Arts District's Members-Only SoHo Warehouse [Curbed LA]