Investment appetite in Los Angeles, especially in the commercial sector, has been reserved over the past six years. However, this trend appears to be slowly changing. While San Francisco, for example, experienced a boom due to demand for office and residential space from AI companies and executives in the wake of the pandemic, Los Angeles could now also begin to see positive investment development.
In mid-September, the Urban Land Institute (ULI) convened its Advisory Services Program to evaluate downtown Los Angeles and present ideas for revitalising the struggling urban core. The presentation focused on three key market challenges: addressing homelessness, combating crime, and improving public spaces. Additionally, doing business in the Los Angeles metropolitan area, which would rank among the 20 largest economies in the world if it were a standalone country, remains difficult and costly compared to other US cities. Added to this are decades-long challenges regarding housing and affordability.
Potential Despite Adversity
Marilee Utter, President of Citiventure Associates and a leading ULI member, expressed confidence: she emphasised that the city centre possesses numerous assets that flourished before the pandemic and will undoubtedly regain their former glory. Although there are no quick fixes for Los Angeles, especially for the city centre with an office vacancy rate exceeding 20 per cent, an increasing number of investors are recognising the potential for long-term commitments, even from outside the region.
Bill Witte, the recently retired real estate developer and founder of Related California, articulated an optimistic view of the city, particularly the downtown area, late last year. He explained that the situation is better than assumed, and the city centre continues to represent the cultural core of the region. Pragmatists, meanwhile, see the region's challenges as a direct prompt for investment. David Brickman, President of Residential Real Estate and Partner at D2 Asset Management, stated that his company is active in Los Angeles due to the stable outlook despite affordability issues. Solid housing for middle-income workers offers an attractive opportunity for higher returns in moderate-income neighbourhoods.
Discounted Opportunities and Long-Term Perspectives
New York's G4 Capital Partners also expanded into the Los Angeles market in April, opening an office to provide private financing for residential projects. Larry Grantham, Senior Managing Director at G4, noted that the capital revaluation in the greater L.A. area has set the stage for increased transaction volume. Given significant amounts of untapped capital, they are ready when the market recovers.
Other investors are looking beyond the current and next few quarters, pursuing a long-term strategy. Groups like Uncommon Developers aim for long-term holdings rather than quick sales and have secured properties at lower values that are expected to pay off in the long run. For example, in summer 2025, the company acquired the Figueroa at Wilshire office tower in downtown at a 40 per cent discount for $210 million.
- —Family offices are currently seeking investment opportunities, and from a multi-generational perspective, Los Angeles appears favourable.
- —New York's Fortress Investment Group provided $96 million for Cityview's Jasper multi-family project in Downtown L.A.
- —Capital Group, one of the world's largest investment firms, acquired the Bank of America Plaza office tower, its corporate headquarters, for $210 million in March.
These transactions show significant price discounts: the Bank of America Plaza was traded for just under $150 per square foot, while the Aon Center sold for approximately $130 per square foot, which is significantly below the pre-crisis average of $450 per square foot. According to Newmark data, in the second half of 2025 and the first half of 2026, half of all office property sales in the greater L.A. area were conducted at a loss. Cushman & Wakefield analysts expect these price adjustments to continue, leading to more activity from value-add investors, owner-occupiers, and public sector buyers.
Ran Eliasaf, founder of Northwind Group, a Manhattan-based real estate private equity firm, declared after acquiring the office complex at 333 South Grand Avenue in June at a heavily reduced price: "The broad re-evaluation of office buildings in Downtown Los Angeles has created an attractive entry point that fundamentally changes the competitive position of the new owners."
