New Study Charts Growth of WeHo’s Eastside and Calls Out Challenges

The dramatic evolution of West Hollywood’s Eastside is likely to continue, but with challenges posed by the lack of parking, small lot sizes, a saturation of the retail market and a disparity between residents’ incomes and apartment rents.

That’s according to a detailed study of the area by Rosenow Spevacek Group (RSG) that was commissioned by the city as part of its Eastside Community Plan.

“While some of the blighting conditions noted in 1997 still ring true today, such as parking inadequacies and small parcel sizes, other issues such as minimal incentive for investment and a low real estate transaction rate have changed dramatically, placing the Eastside community at a crossroads where it can make some strategic choices about its future that weren’t available 10 or 20 years ago,” the RSG study states.

A report by the city’s Community Development Department, quoted below, sums up key elements of the RSG study:

1. The Eastside real estate market is strong … Over 15 years, the assessed property value of the Eastside grew by 181 percent from $409 million in 1997 to over $1 billion in 2012. These

investments laid the groundwork for the recent boom of private investment to the area (e.g. the Huxley and the Dylan apartment buildings, expansion at the Lot, Movietown and Domain/Faith Plating), which when taken together have an estimated worth of $400 million. In the last 10 years, over half (54 percent) of commercial properties were sold in the project area, suggesting a strong interest in owning commercial real estate in the Eastside.

2. Average household incomes for Eastside residents (around $30,000 a year) are lower than (that of) their neighbors in Los Angeles and other parts of West Hollywood (around $55,000 a year). Despite lower than average incomes, the cost of housing in the Eastside is high, with studio-unit rents ranging from $1,300 in rent-controlled units to $2,500 in new market- rate buildings. Lower than average incomes and high rents limit disposable income that could be spent in the area on dining, shopping, and other services.

3. The Eastside population is changing. The young professional population (25-44 years) is growing, while the elderly population (over 65) is declining. The Russian-speaking population is also shrinking as Eastern European immigrants age and no new immigrant population is entering the Eastside to maintain that presence.

4. Most people are commuting to and from the Eastside; only six percent of the employed Eastside

population lives and works in the area. While the Los Angeles region is known for its “jobs-to-housing mismatch,” where a high percentage of the population leaves (its) neighborhood to commute to work, the Eastside jobs-to-housing mismatch is particularly high. Approximately 94 percent of employed Eastside residents leave the area for work.

Census data shows that a high percentage of Eastside residents work in the arts and entertainment sector (typically a higher paying sector) and commute to jobs in downtown L.A., Burbank, Studio City and Century City. This differs from the data on Eastside employees, many of (whom) work in retail (typically low paying jobs) and commute from East Hollywood, Koreatown, the Valley and Beverly Hills. New high-end office development and apartments in the Eastside may help reduce this imbalance.

5. Asking rents for retail and office space in the Eastside are below the city average. Rents on the Eastside are comparable with Culver City, Burbank, Hollywood and Downtown L.A., but are lower than Santa Monica, Beverly Hills and the greater West Hollywood area. However, vacancy rates for retail and office space on the Eastside are very low, showing strong demand for space and a potential for rents to increase.

6. Rents for new residential and commercial space are significantly higher than those for existing buildings. New buildings in the area offer a wide array of amenities for tenants (e.g. gyms, screening rooms, communal kitchens for cooking classes). These amenity-rich buildings will attract a new demographic of residents and employers that can afford higher rents.
7. The Eastside market for retail and restaurants is saturated. In other words, there is almost no unmet demand for retail shops on the Eastside with the exception of auto repair and parts shops. The surrounding area is also saturated with retail shops and restaurants. This suggests that new shops and restaurants seeking to be successful in the Eastside (must) meet a special niche or have cache.

8. There is some clustering and job growth in the information, construction and real estate sectors. There may be additional growth and clustering in production-related industries that are synergistic with the new creative office space tenants at the Lot (e.g. Will Farrell’s “Funny or Die” production company and the Oprah Winfrey Network).

9. Future development and business expansion may be hindered by small commercial lots with dispersed ownership patterns, aging building stock with few amenities and constraints on public parking to serve businesses that cannot provide parking on-site.

The area known as the Eastside is defined by Hayworth Avenue on the west and La Brea Avenue on the east, extending for several blocks north and south of Santa Monica Boulevard. Historically its 340 acres have been viewed as the rundown sector of relatively affluent West Hollywood — a place stereotyped by the presence of prostitutes, homeless people and sidewalk robbers and small shops opened by emigres from Russian-speaking countries in the former Soviet Union.

What has begun to change that is projects such as the Dylan and Huxley apartment buildings and apartment buildings under construction at Movietown Plaza and the former Faith Plating lot that will add a total of 900 new rental apartments and 111,000 square feet of retail space. The RSG study projects the Eastside’s population may jump from the currently estimated 10,060 people to 11,500 by 2020. Another factor in the area’s growth is The Lot, the former Pickford Studios, where a single office development will add about 200,000 square feet of office space for the creative industries.