It didn’t take very long. It’s been roughly three months since IDS Real Estate Group announced the listing of Metropolis, a 6.3-acre development site in downtown Los Angeles, and now IDS and joint venture partner California State Teachers’ Retirement System have found a taker. According to a Bloomberg article, China-based Shanghai Greenland Group Co. will acquire an interest in Metropolis from CalSTRS and invest $1 billion in the project, which is entitled for nearly 1.7 million square feet of mixed-use development.
IDS relied on commercial real estate services firm CBRE Group Inc. to secure a buyer for the site, which was marketed for purchase as a whole or by separate parcels. “Downtown Los Angeles is in a period of extraordinary revival, and Metropolis lies at the center between its key economic drivers,” CBRE notes in the Metropolis offering brochure.
Metropolis consists of five parcels spanning an entire city block between downtown’s highly successful L.A. Live mixed-use entertainment complex and the city’s Financial District, right in the center of the proposed the Avenue of the Angels open-air restaurant and retail stroll. As noted in a 2012 memo from the CRA/LA, the entity formerly known as Community Redevelopment Agency of the City of Los Angeles, IDS’s most recent plan for Metropolis calls for approximately 1,600 hotel rooms, as much as 495,000 square feet of office space and up to 93,500 square feet of retail/restaurant space. The project has been in the works for years. Its master plan has undergone changes to accommodate market demands, and the current plan for the site is clearly one that proved irresistible to investors near and far.
“The fact that IDS got the site re-entitled or is in the process of doing that was key in attracting buyers and bids because that means that whoever is going to buy the site doesn’t have to work through it with the City and can move forward with development,” Michael Soto, a research manager with commercial real estate services firm Transwestern, told Commercial Property Executive. “That was a very key part. It was very shrewd of them.”
Investors from across the globe have been taking a strong interest in the metropolitan Los Angeles real estate market. During the second quarter, sales totaled more than $2 billion for office assets alone. China has long been an active investor in the area, and now activities are starting to pick up even more.
“Everybody’s been asking when the Chinese are going to really buy in mass; they’ve been buying residential real estate in key markets of Southern California for quite some time now, and a couple of years ago we started seeing Chinese investors buying hotels,” Soto said. “I think what you’re really seeing now with the Shanghai Greenland acquisition, is you’re moving into another phase where a lot of Chinese investment firms are now starting to do development.
This new focus, Soto added, will be on trophy assets, and Metropolis certainly fits into that category. “I think the Chinese are really breaking into downtown L.A. There’s something about downtown L.A. It’s very exciting; you can be at the forefront of the next cycle of development.”
Additionally, as CBRE notes in the offering brochure, ” Downtown Los Angeles has become the most dynamic, glamorous and vibrant area in Southern California.