Downtown L.A. still lagging in one department

Despite all the new restaurants and night spots, the office market remains weak, especially when compared with West Los Angeles, Santa Monica, and Beverly Hills. The recent purchase of 400 South Hope Street went for $337 a square foot, which is shy of what the sellers paid for in 2005 - and way lower than the $450 that some properties were going for in 2007."If any central business district is lagging, it's Los Angeles," Dan Fasulo, a Real Capital managing director, tells the WSJ. Still, the picture isn't altogether bad.

While office investors haven't flocked back to the city, they certainly are taking notice. During the depths of the downturn, downtown office deal activity ground to a halt with no large office building transactions in 2009 and only $211 million in 2010, according to Real Capital Analytics. By comparison, this year is off to a decent start with $254 million in deals in the first quarter, although it still is well off the pace of the $3.4 billion in sales rung up in 2007 overall at the peak of the market. Other parts of the city are enjoying more demand from technology, entertainment and other office tenants. But the declining availability of space and increasing rents in these markets work to downtown Los Angeles's benefit.