For over 40 years, Los Angeles, Calif.-based Major Properties has handled and brokered retail real estate deals in and around downtown Los Angeles and Hollywood. A family-run business, brothers Jeffrey and Bradley Luster, chief executive officer and president, respectively, are known today as major industry brokers in Los Angeles. Major Properties services both commercial and industrial clients, as well as private buyers for new developments, showrooms and loft space. Clients include Kodak, Bonnie Sportswear and Harley-Davidson. Bradley Luster recently spoke about the state of the retail real estate scene in Los Angeles and the appeal of doing business in downtown L.A.
WWD: What are some of the changes you have seen in the retail real estate landscape in downtown Los Angeles?
Bradley Luster: The downtown L.A. retail landscape has changed in a few ways. Major big-box retailers such as Home Depot, Costco, Lowe’s Home Improvement and others have taken to finding space downtown by working with private developers and city agencies to find opportunities. Restaurants, fast food and some upper-end types have also come into downtown, and [they] continue to look for opportunities.
Also, big developers, both national and international, are looking for opportunities in downtown Los Angeles. The pressure is on traditional retailers to compete with minority-type businesses that understand the nature of downtown and the multicultural makeup of the various districts.
WWD: What is the current “mood” within the retail real estate market?
B.L.: In regard to attitude, the market remains hot in downtown Los Angeles. Retail and showroom spaces are two of the hottest markets, and the properties that are available are still demanding sellers’ market prices. This is under pressure as lending is drying up. The credit crunch could be really felt if not resolved soon as downtown Los Angeles is not immune to a worldwide financial crisis. But the demand is booming at this time.
WWD: How is Major Properties handling the demand coupled with nervousness about the economy?
B.L.: The market is in transition. A shift in ownership comes when you have a credit crunch that can wipe out those who are overleveraged and those with cash can buy into the market.
Also, downtown property traditionally does not trade hands that often and you will have ownership that can last a generation or multiple generations. The sale of properties and changes we have seen over the past seven years is not typical, but I am sure it will accelerate over the next two years during this economic transition of ownership.
We are seeing a mass move by overseas money into Los Angeles’ downtown districts and other areas as the dollar shrinks in value. Downtown [so far is benefiting as it is] valued better than most markets, but time will tell if values will remain stable.
WWD: How has the New Mart building changed the downtown L.A. retail scene?
B.L.: The New Mart building is now the center of the garment business and it showcases the traditional style of Los Angeles. It is run by one of the most “in-the-know” management teams. The building and business is treated with class and style and is the jewel showroom building of the entire West Coast garment fashion industry. The Cooper Building and its management is also a family-run operation and runs a close second to New Mart.
WWD: Does Major Properties develop retail portfolios?
B.L.: Major Properties and our partners own approximately 60 buildings in the downtown L.A. market, and [we] are bullish on downtown. We are not sellers and are looking for opportunities to buy in this market.
WWD: What is the draw for retailers in the downtown Los Angeles area?
B.L.: Today, downtown Los Angeles is drawing more traditional and artisan-type retailers due to the unique makeup of the variety, and also of ethnicity and cultures located all in one place. The numbers of people to service and the anticipation of fantastic sales is also significant. Restaurants, for example, that predicted first-year sales in the downtown area at $1 million to $1.5 million have exceeded all expectations and performed at around $4 million. That is not an aberration, as I personally know of a great place on Figueroa and another at Sixth and Main Street, two extremely different clientele and patrons, that have done well.
Downtown Los Angeles’ growth and birth as an urban city is in the infancy stage and now moving toward [the toddler stage]. We have a long way to go and it is too early to define downtown L.A. We will not be a West Coast New York City or another San Francisco. We will be unique and we will be defined as downtown Los Angeles.