Downtown Los Angeles is a hot spot for investors now that it's on the verge of becoming a 24-hour location.
The Los Angeles Community Redevelopment Agency recently gave the CIM Group, Los Angeles, the go-ahead to develop a supermarket and 250 rental lofts in downtown L.A. "We're connecting the pieces of downtown and creating a community," said Avi Shemesh. Mr. Shemesh is co-founder and principal of CIM Group, which invests in urban renaissance projects on behalf of California's two pension fund giants, the $134 billion California Public Employees' Retirement System and the $92 billion California State Teachers Retirement System, both in Sacramento..
"Bringing in Ralphs Grocery Co., the first full-sized supermarket in downtown L.A., is the key amenity that will speed up revitalization of the area," predicted Mr. Shemesh.
The $180 million CIM fund is focused on developing retail and housing for the area. "L.A. is very different from other cities because there's an employment base of 200,000 and a great shortage of housing, so the demand is huge," Mr. Shemesh said. His firm has acquired three buildings that will be converted to rental lofts with ground floor retail space, as well as two other buildings that are being converted to condominium lofts. "Once the deal with Ralphs was signed, a number of other retailers and coffee houses expressed interest in coming into the area," he said.
Real estate industry sources said CIM will soon launch a second $400 million fund to take advantage of other investment opportunities downtown Los Angeles offers. Mr. Shemesh said he couldn't comment on upcoming funds.
CalPERS and CalSTRS have made other investments in downtown Los Angeles. CalPERS invested $54.6 million in the development of Met Lofts, a 264-unit loft development through MacFarlane Partners LLC, San Francisco, which specializes in urban real estate projects; CalSTRS invested an estimated $270 million to acquire Arco Towers, a 2.7 million-square-foot, 52-story office complex through its first joint venture with Thomas Properties Group Thomas Properties Group, Los Angeles.