Investment Opportunity for Premier Los Angeles Arts District Opportunity Zone Project

Thursday, March 14, 2019

HFF, on behalf of the owner, is marketing a joint venture investment opportunity for sale in ProduceLA, a ground-up, mixed-use development located on 1.64 acres at 640 S. Santa Fe Avenue in a Qualified Opportunity Zone in the Arts District of Downtown Los Angeles. The project will deliver a fully entitled, 113,613-square-foot, Class A creative office building and will be “shovel ready” by the second quarter of 2019. ProduceLA is the only purpose-built creative office project built in the Arts District that can accommodate a 100,000-square-foot single tenant. The development of the project is a testament to the increasing commercial and residential demand in the submarket, and the property is well-positioned to become the top commercial property within the Arts District.

The proposed four-story building has spacious open floor plans, 12-foot ceilings, outdoor balcony space, a 4,000-square-foot rooftop deck with sweeping views of the Arts District and Downtown Los Angeles and parking for 216 cars. The property is located just half a block from the entrance to the Sixth Street Viaduct Project and PARC (Park, Arts, River and Connectivity Improvements Project) in Los Angeles’ Art District. Situated on the eastside of downtown, the Arts District is famously home to galleries and cultural spaces, live/work lofts and unique restaurants and retail in converted warehouses and former factories. Prior to the Arts District being established as a bona fide creative industry destination, the creative industry hubs of Los Angeles were all located in the West LA Office market. Downtown Los Angeles is the main transportation hub of Southern California and has historically been home to Los Angeles’ largest corporate employers due to the central location and access to the largest talent pool. The Arts District has acted like a catcher’s mitt for TAMI tenants who want to work in a cool environment where they are surrounded by other creatives and can lease authentic creative office space for a substantial discount to the West LA creative markets. The maturation of the dining and cultural scene in the Arts District caught the attention of tenants and developers alike. Since 2013, some of the most exciting chefs and creative tenants in Los Angeles have made the Arts District their new home.

ProduceLA Investment Highlights

  • Opportunity Zone Investment in a Core Office Market:  The property is located on a rare site that sits both within a Qualified Opportunity Zone and a bona fide core office market. An investor will have the ability to capitalize on the tax benefits of investing in an Opportunity Zone while securing a long-term investment in one of Los Angeles’ fastest-growing office markets. Across the U.S., the census tracts that make up the Opportunity Zone Program have a 30 percent poverty rate with residents earning, on average, 59 percent of area median income; however, the Arts District boasts some of the highest-average household incomes in the county, averaging in excess of $126,000, 145 percent of the overall average for LA County residents.
  • Continued Creative Tenant Migration into the Arts District and Downtown:  As part of the greater Downtown Los Angeles renaissance, the Arts District has become the most popular destination for tenants looking to relocate to the city’s core. The continued gentrification of the Arts District and corresponding increase in tenant and resident demand has spurred an influx of institutional investment and development in recent years. Over the past five years, numerous tenants have relocated to the Arts District with a concentration in the entertainment, fashion, technology and co-working industries.
  • Ample Parking:  The project includes 216 parking spaces equating to an approximate 2.0/1,000-square-foot parking ratio. Parking is very scarce in the Arts District due to the original industrial nature of the area and the resulting lack of dedicated parking lots and garages. The parking shortage in the immediate area provides the property the opportunity to generate meaningful income from tenant, transient and overnight parking from neighboring residential buildings.
  • Proximate to Public Transportation:  ProduceLA is located less than five minutes from an Interstate 10 on-ramp, providing outstanding access to all of Southern California. The property is located less than one mile from the Little Tokyo station of the Metro’s Gold Line. From this station, residents have access to Los Angeles’ impressive Metro Rail system, which boasts two heavy rail lines, four light rail lines, 80 existing stations and 23 new stations under construction. The Little Tokyo station will be part of the planned 2020 Regional Connector Project that includes 1.9 miles of underground light rail and the addition of three new stations in DTLA.

For more information on this commercial real estate listing or any other office properties for sale in Southern California, please contact Andrew Harper, Paul Brindley or Matthew Stewart in HFF’s Los Angeles office. To view HFF’s current real estate investment listings, please click here to be directed to HFF’s property search page.

Holliday GP Corp. ("HFF") is a real estate broker licensed with the California Department of Real Estate, License Number 01385740.

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