Los Angeles Rising: Trending Neighborhoods and Rising Value

Los Angeles is an ever-changing landscape – ever growing, ever developing and ever expanding. As new streams of residents enter the dense urban landscape, developers are continually building to meet the increasing demand for accessible housing. As cranes dance around Downtown Los Angeles’ skyline, developments continue to pop up in trending hot-spots like Echo Park, Highland Park, and Silver Lake.

Echo Park, Highland Park, and Silver Lake have grown exponentially over the past decade and these so-called “hipster” neighborhoods have become epicenters for gentrification. Although these areas have gone through various stages, history has shown that they have always attracted hip and urban influencers through the allure of untapped potential, ease of accessibility, and a relatively lower cost of living.

These neighborhoods also hold a significance to a larger Los Angeles narrative.

Rooted in Los Angeles’ Cultural DNA

Silver Lake became a refuge for the LGBTQ community in the late sixties, notably shown through the peaceful demonstration in February of 1967 held at the Black Cat Bar. Now a historical monument, the Black Cat Bar was the site for the first documented LGBTQ civil rights demonstration in the nation. Over the past 10 years, Silver Lake has developed into one of the most expensive areas in Los Angeles’ East Side, boasting affluent residents and hip and trendy retail and restaurants.

Highland Park Bowl was erected during the midst of the Prohibition era for a place to relax and have fun. Over time, the facade was covered and the building became a local hangout for punk-rockers to see live shows while being rebranded as Mr. T’s Bowl. In 2016, a local group purchased Highland Park Bowl and through a demolition discovered that much of the original venue could be restored and repurposed, continuing a common thread that ties many of the redevelopments throughout Los Angeles’ East Side.  Highland Park  is still going through an expansion and developers are discovering the demand for more housing. Luxury condominium projects and new tenants are just starting to sprout along the streets of this historic community.

Echo Park, nestled in between Highland Park and Silver Lake, represents the middle ground of the gentrification battle. Currently, rent in the area is approaching astronomical levels while the seeds of initial developments are reaching fruition and many are asking if they are already late to the proverbial party. There is still a strong mix of both new and old in Echo Park, and reverberations remain of cultural and counter-culture movements that began along Glendale Boulevard and Echo Park Boulevard.

The Rising Tides of Value

There is a strong correlation between development, gentrification and rising value. The median value of a home in Highland Park in 2013 was $426,000. In 2018, the median home value was $801,400, which is nearly double that of 2013, and an increase of 11.6% from last year, and is anticipated to increase 6% next year. In Silver Lake, the 2013 median value was $658,000, and in 2018, $1,184,000. [Again, nearly double in value from 2013, and a healthy] increase of 13.4% from last year, with an expected rise of 9.4% next year. Echo Park tells a similar story; the median value of a home in 2013 was $475,000, and in 2018, it rose to $850,900. The 2018 value is an increase of 4.81% from last year and is expected to increase by 5.6% next year.

All three neighborhoods have median home values that grew by nearly 200% in just 5 years. The rent prices for a 2-bedroom, 1-bathroom apartment tell a similar story

Median Rent Prices 2012 2018 Increase
Echo Park $2,347 $3,700 150%+
Silver Lake $2,195 $4,300 190%+
Highland Park $1,100 $3,495 300%+

As the residential market started to boom, so did the retail market. Along the main boulevards in these neighborhoods, retail rents are continuing to increase year by year. Along Sunset Boulevard in Echo Park, the triple net asking rent per square foot median price in 2012 was $24. In 2018, just 6 years later, the price rose to $31. Glendale Boulevard exhibited the same price fluctuation. On Sunset in Silver Lake, the median price rose from $28 to $41 over the same period of time. Figueroa, Rowena, and York all saw similar price hikes and all are expected to grow exponentially in the years to follow.

The Hipster Aesthetic

The so-called “aesthetic” culture of these areas is part of what is making them thrive. Around every turn, there is always an Instagram worthy moment at a cute coffee shop or hip boutique. Millennials love to enjoy a $5 cup of coffee that they can snap a pic of and share with friends.

Our team recently marketed a newly redeveloped building in the heart of Echo Park, providing a prime example of this new aesthetic.  Much of the appeal of Mohawk Collective comes from its design – all glass, iron elements, and exposed industrial vibe. Many developments and shops in this area are a part of this style and they attract consumers. The area directly around and in Echo Park, in general, will inevitably follow in this design retail trend.

Notable Developments

Other new developments in the area, like 1111 Sunset, are continuing to attract visitors and residents. This project will include 994,000 square feet of residential, commercial and hotel space with 778 condos, a 98-room hotel, and a 4000 square foot conference center. Other high-end residential developments are popping up, like The Griffith in Silver Lake and Alexan South Echo in Echo Park. The Griffith includes 11 3-bedroom single-family homes, starting at a price of $1,200,000. The Alexan will house 200 apartments, with rent prices between $1700 and $3900 per month.

These developments will attract new residents and visitors, driving up both home values and retail rent prices. Various neighborhoods in Los Angeles are following this same trend. Keep a look out for our next post that explores which neighborhoods are quickly developing to join the ranks of Echo Park, Silverlake, and Highland Park.

The New American Strip Mall

Boring, old-fashioned, dirty, necessary. These are the words that might come to mind when Americans today think of a traditional strip mall. Ever thought about the work that goes into designing a strip mall? It may be hard to fathom that there is any sort of methodical reasoning that goes into the physical design of these classic shopping centers, especially the ones that haven’t been remodeled since the early 70’s.

The Old American Strip Mall

Dating back to the 1880’s, utility always dominated architectural design or style when it came to erecting a strip mall. At this time, the streetcar made urban expansion possible. This new transportation allowed residents to enter the perimeter of cities where it was assumed that land values were higher. Due to sprawl caused by the streetcar, speculators erected single-row shop fronts and were cheaply built solely to produce enough revenue to pay the land taxes. Coined as “Tax-Payers”, these buildings were meant for easy destruction at some point in the near future. However, with the introduction of the car, the intended sprawl strips were changed and the Tax-Payers weren’t demolished. More of these buildings were established to accommodate cars in the fashion of the “Main Street” commercial site, with room for perpendicular parking along the facade. As Tax-Payers became more popular, they began to be moved to the rear of the property line with a parking lot separating the façade from the street to accommodate more vehicles. The Tax-Payers would continue to thrive and become precedents of many of today’s strip malls. Many iterations of the strip mall would come from this, including the enclosed shopping mall and power centers.

There are many commonalities of strip malls across the nation. They are between 5,000 and 100,000 square feet and are of plain style, most likely to keep costs down. Many have flat roofs and are 1-story, as in the tradition of the tax-payer. They include asphalt roofs, painted block, metal-framed windows, concrete sidewalks, and asphalt parking lots. This may be the case for strip malls designed in the latter half of the 20th century, but what about strip malls today?

Shifting Toward the New Strip Mall

As consumer interests start to change, the type of stores that go into strip malls change, and in turn change the design as well. One may think that strip malls are failing due to the ease of online shopping; however, it is the opposite. Strip malls are thriving today because many have transformed to become more service-oriented; they include interests such as yoga, salons, spas, urgent care facilities, and insurance. Becoming more service-oriented involves much more of an experience over the normal goods-oriented strip mall. This experience is reflected in the design of the mall’s exterior design and layout in addition to what its tenants may offer. The priority has now shifted to match the aesthetics of these new tenants and the surrounding neighborhoods. By doing so, it can attract more consumers from the outside in, contributing to an already prosperous industry.

Shopping centers are still thriving in an upward trend largely due to a more extensive design process. It all starts with the idea of a concept that matches the needs of the area, followed by an extensive research of market trends, surveys, mall positioning, retail circulation, zoning, and more. Choosing the right architect is also crucial to convey a concept and could contribute to the success or failure of the shopping center. Though this may seem like a simple task, it is beneficial to have a special team and or expert mall adviser to conceptualize, efficiently manage, and coordinate the design planning phase. Up until recently, it was not understood by many that there needs to be an organized approach towards shopping center design and planning. Better shopping center development is crucial and is becoming more apparent across the country, contributing to a better, more enjoyable, and more efficient shopping experience.

Strip Malls are an important part of American history and have completely altered the experience of shopping for many people since their creation. While homogeneity has cast its shadow on many strip malls throughout America, today’s centers involve a much more extensive design process that attempts to imitate the design of the neighborhood and create an experience for many service-oriented businesses. Strip malls have thrived since their creation, and their success will continue far into the future. The new American Strip Mall: enjoyable, unique, and of course, still, necessary.

Millennial Insight on Retail

For most, it’s easy to think of a millennial as a teenager with a phone attached to their hand or constantly binge-watching Netflix shows but the reality is that this generation is growing up and so is its retail habits. The most important thing to realize about this generation is the great diversity within it, primarily with its age range. It includes anyone born between 1978 and 1995, which means the oldest millennials are roughly 40 and the youngest are 22. This is a large gap that encompasses many milestones. As a millennial on the younger side and a college student, I have much different spending habits than someone born more towards the beginning of the generation who is in their 30s, perhaps married with children. It is important for retailers to focus on catering to all sides of the spectrum. As more and more millennials are starting to make the shift into the majority of the workforce and consumers, retailers should understand and re-evaluate where millennials’ shopping habits are currently. By doing so, this can help qualm some fears and anxieties about the future of retail to tenants and investors. For more information how generations have affected and adjusted to the industry, click here.

Online Shopping

While the convenience of a mobile platform is paramount to millennials, it is not the only reason they keep gravitating more towards cyber-retailers; it’s simply the best way to see what is available on the market. As established, a lot of the generation’s time is spent online, and in particular social media sites. Naturally, some profiles stand out more and the owners of these accounts have now become known as “social media influencers”, the use of which can be crucial for a lot of retailers. To give an example, there are many influencers, which also include bloggers and vloggers, who demonstrate or try on their purchases in picture or video format. They often link where to buy the products or tag companies, making the purchasing process very simple as well as giving exposure of the brand to thousands of people with just one photograph. It can be seen as virtually trying on or testing products. However, social media is also a proponent for why millennials still go out to get one thing they can’t online: experiences. Well, that and no shipping prices.

Experiences Matter

With cost of living and student debt constantly rising, it is no wonder why millennial spending habits are adjusting. If there is an opportunity to spend $20 on a new top or trying a new restaurant, most would choose the latter. This is true for a few reasons, one of which being its correlation to social media. You can post via various apps where you are and what you are doing to showcasing to friends your experience and awareness of what is “cool”. Going out also allows for social interaction and promotes the popular wellness of the work-life balance. If most of one’s spending money was spent on material items, it wouldn’t leave much to spend with friends and activities. Since a lot of millennials’ time is spent online, human interaction is crucial to social life. This is why restaurants, bars, trendy workout studios, and activity centers have been left undisturbed by the “retail apocalypse”.

The other reason for shopping brick-and-mortar is the fact that it is a leisure activity to partake in. Though we like to buy online, there is something far more gratifying to have a product immediately —another defining quality of the generation. Personally, if I have time, I greatly enjoy just wandering down each aisle touching, feeling products, reading labels and being around other people doing the exact same. Additionally, shopping itself can be seen very therapeutic. Studies even show that “retail therapy” can been a useful strategy in trying to improve one’s mood [Atalay, Meloy]. Retailers can use this as an advantage by making the shopping experience cater to consumer’s senses – free samples or demonstrations, a distinct smell in the store, live music or other events on weekends, etc.

Ethical Spending

For a long time, the biggest fad was trying to constantly discover the next fad. However, recently there has been a slight decline in materialism. There is a large emphasis on ethical buying and natural products. People are becoming more engaged in politics, cultural, and societal issues which can translate to their purchasing habits. For example, some shoppers may be less likely to buy something from stores that partake in child labor, support certain politicians, or fire people in favor of machine automation. Millennials are less likely to spend money unnecessarily but when they do spend, they prefer to give money to brands with positive and sustainable business ethics, even if that means shelling a few extra dollars. The graphic below [Psychologytoday.com] showcases that majority of the generation’s expect more of large corporations than just the products they provide.

In conclusion, there are several more aspects that retailers should be taking into consideration when designing products and services toward millennials. While stereotypes of the generation may exist for a reason, some are quite outdated and creating marketing tactics towards them will not benefit the producer or the consumer. Tapping into what current trends or habits are occurring could mean tapping into a larger potential and profit.