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Proprietary Data Insights Top Residential REIT Searches This Month
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If you believe the somewhat rudimentary data LinkedIn collects (and we actually do), cities are bouncing back. And the people who used the pandemic as an opportunity to, yet again, proclaim cities dead were flat-out wrong. The following chart shows year-over-year population growth for U.S. cities: Source: LinkedIn San Francisco stands out, given the prevailing sentiment that it’s a cesspool of drug use and homelessness. A place where nobody with choice and in their right mind would want to live. But while San Francisco and other big cities have their problems, people who don’t actually live in these places tend to overblow, if not sensationalize, the situation. We have boots on the ground in San Francisco, Los Angeles, and New York. And at the neighborhood level, things are humming along. Bars and restaurants are packed. Any vibrancy the pandemic stole from great urban enclaves has roared back. Based on LinkedIn members changing their cities on their profiles, the professional networking site estimates that for every 10,000 members, nearly 83 moved to San Francisco over the last year. Not far behind, equally maligned Seattle had just shy of 80 of every 10,000 LinkedIn members taking up residence there over the last year. We didn’t mention Austin first because it’s Austin. Everybody’s moving there. Still. Moving rates aren’t positive for all cities. Portland, which has taken maybe the most heat in social and political issues since the pandemic, lost 87 LinkedIn members per 10,000 over the last year. Another issue with prematurely writing off cities is too many detractors focus on what they see and hear about downtown. If you have any experience living in or extensively visiting a big city recently, you know the neighborhoods can feel like small towns, even if the downtowns resemble ghost towns. That said, if the data we’re about to show you from LA is any indication, even a dead downtown is still doing quite well on housing, even amid the present so-called cooldown. |
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Housing |
You Wouldn’t Know Downtown’s Dead |
Key Takeaways:
Loftway is a real estate brokerage in downtown Los Angeles that focuses on loft-style development. It recently released its 2022 report on sales activity covering 39 buildings. The data shows that, even in a struggling city center, real estate prices remain high. The Juice’s LA office is a stone’s throw from downtown. Take it from us: While still worth your time for dinner and drinks or a visit to Grand Central Market or The Last Bookstore, the area is a shadow of its pre-pandemic self. Prior to lockdown, DTLA was buzzing with restaurants, cocktail bars, visitors, and office workers. Some restaurants and bars have closed, but there are still a ton to choose from, with new ones popping up on the regular. Tourism is rebounding a bit. Visitors still go downtown, thanks in part to live events such as sports. But the office workers – the ones who ensured that daily buzz… it feels like most of them are still gone. To be clear, this isn’t the case in the prime neighborhoods, located mainly west of DTLA. Their restaurants and bars are doing brisk business. But for as rough a time as downtown LA is having, housing remains super expensive. Source: Loftway It costs $702 per square foot across the 39 buildings Loftway sells units in. Pretty impressive. Nationally, according to the St. Louis Fed, the price per square foot of a typical home is $212 as of December 2022. Realtor.com puts the price per square foot across LA at $644. Thanks to a lack of inventory, prices haven’t come down that much in DTLA, despite drops in other areas of the country. Only 12 of the buildings Loftway covers had prices fall in 2022. As for rents across units in downtown LA, Zumper puts the median for a one-bedroom at $2,797 as of mid-January. Broaden it across the city and the median drops to $2,433. So you still pay a premium to live downtown, even in Los Angeles, which, let’s face it, has a pretty lame downtown compared to, say, much of super dense Manhattan or even San Francisco. One caveat: Los Angeles is huge. So that median gets low outside of downtown because it includes some of the city’s less desirable neighborhoods. In prime neighborhoods, prices come closer to and sometimes eclipse what you’ll find downtown. For the record, the median rent for a one-bedroom in downtown SF was $2,505 as of mid-January, compared to $2,941 citywide, underscoring what’s happening at the neighborhood level versus the central business district. The Bottom Line: For all the problems downtowns face thanks to remote work and social issues such as homelessness, it still costs a pretty penny to live in them. You’ll pay prices comparable to the most desirable urban neighborhoods surrounding the city core. When you hear the narrative that cities are dead, think twice. By and large, city living doesn’t happen downtown. It happens in the surrounding neighborhoods, which are, with a few exceptions, alive and well. The pandemic-induced shift to remote work hasn’t impacted them as much. But as some cities convert vacant office space to residential units, expect a new type of vibrancy to emerge in what once was, in many cases, the heart of the city. |
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