Wednesday, September 23, 2009

Why hasn't Broadway (the Los Angeles one) been redeveloped?

Broadway in downtown Los Angeles has among the most beautiful art deco buildings in the United States (for a nice photo, go here).

Yet while the buildings are filled with ground floor retail, many of the floors above sit empty; my understanding is that they don't comply with current earthquake codes. But given that land is so valuable in LA, and that the bones of the buildings are so good, it is a bit of a mystery that the buildings haven't been retrofitted and leased out.

The answer, apparently, is that the ground floor leases are very valuable--so much so that one can't justify replacing the current ground floor retail with a functional mixed-used building. The retailers are not high end shops, either, but rather are immigrants who cater to other immigrants. This is a beautiful example of Alonzo's bid rent theory, where low income uses incorporate density to outbid high income uses.

1 comment:

Uncle Billy vs. Mont Pelerin said...

That plus the fact that there really aren't any tenants out there. People are going out of business. It is not business as usual. This is not a normal situation.