Vacancy to Vitality: A Path Forward for Downtown Los Angeles?

What do you think is the single biggest thing holding LA back from fulfilling its true potential?

Carl Muhlstein Well, there are issues above my pay grade—interest rate spikes, construction costs, serial CEQA litigation, etc. That’s stuff we can’t solve locally. What we can solve are the politics of planning and entitlements—the delays, the conditions, the rearview mirror approach to getting approvals.

For example, the Adaptive Reuse Ordinance, which took years to unfold, was already out of date and unusable by the time it rolled out. We’re always looking in the rearview mirror, never trying to figure out what’s 20 feet in front of the car.

Jessica Lall I’m a big believer in LA—that’s why we’re all here. I want to state that up front. I feel like we may talk about all the many challenges we face collectively, but I see fragmentation as being the broad word when I think about LA’s challenges and what holds us back.

LA County has 88 cities. We have cities within cities. A lot of people don’t even realize sometimes that they don’t live in the City of Los Angeles. So the jurisdictional challenges we face are problematic. Within that, there’s fragmentation inside the cities, especially in terms of taking holistic views and bringing people with diverse backgrounds together to solve some of the things Carl just talked about.

Some of that’s inherent in geography, but I do think there’s much that can be done to overcome fragmentation. I’m hopeful—because if we can do a few things right, and there is some low-hanging fruit, we truly can start to overcome many of the challenges we face. But I do think fragmentation is a pervasive problem when you dissect almost any challenge we’re facing, whether at the macro or micro level.

Do you think someone who’s deeply embedded in real estate has the right qualifications to be mayor?

Jessica Lall You know, I think being a successful elected official is a unique skill set, and people can succeed in that role coming from all sorts of backgrounds. Saying, “We need a businessperson,” or “We need this type of person,” can be limiting.

What we do need are leaders who appreciate the value that real estate professionals bring, the value that nonprofit leaders bring. I believe in an executive-style role, we need someone with executive decision-making experience, but also someone who’s willing to convene people, not vilify them for political gain.

When I was at CCA, it was always fascinating to me: we’re in a housing crisis, we need more homes so people can afford to live here, to address homelessness, yet we spend so much time vilifying developers.

We need leadership that doesn’t buy into that narrative. We need people who’ll say: “We need more homes, and that means we need the people who are building them.”

Those folks need to be at the table. We need to create the policies that enable—not just regulate—and use carrots, not just sticks…. Those are the skill sets I want to see in elected officials. If someone has real estate experience and can translate that into strong public leadership, amazing.

Do I think it’s a prerequisite? No.

But I do think having respect for what industry brings—and being able to leverage private sector expertise and resources for community development—is something we should expect from elected leadership.

There’s a perception that the people shaping policy don’t fully understand its real-world impact. Do you think it’s a case of the wrong voices at the table? Or is it not as bad as it looks from the outside?

Jessica Lall I think it’s quite simple: people are not in communication with one another. It goes back to the idea of vilifying. We create lobbying laws so developers—or let’s just call them home builders—can’t speak to elected officials. And then on the flip side, the business community often vilifies elected officials, so everyone ends up assuming the worst. If you’re teaching your children how to problem-solve, this isn’t the behavior you’d teach. And when I was at CCA, I saw how hard you had to push just to have a seat at the table.

Our process is so broken: council meetings are held midday, where only a certain kind of person can show up to speak, and even then, that’s not really when or how decisions are made. They’re often made by a small group behind the scenes, as we all saw on those tapes. People aren’t talking. They’re prevented from talking. They’re afraid to talk. Meanwhile, we have a media environment that’s increasingly clickbait.

I remember when the Council District 14 corruption stories broke, and a reporter called me and said, “You know, I always thought the developers were bribing the City Council—but now it seems like it’s the other way around.”

This is the environment we’re trying to serve people in. It’s broken. I don’t think it’s naive to believe that if we just had more regular, intentional conversations—before ballot measures, before votes, before policies are finalized—a lot of these issues could be mitigated.

….My call to action is this: don’t be afraid to talk to someone you think you disagree with. Find common ground. Share your expertise. Be open to understanding what someone is really trying to accomplish, and don’t personalize intentions so much that you write someone off before the conversation even starts.

Carl Muhlstein …folks in the Planning Department have never built anything, Building and Safety is overwhelmed, and there's this reluctance to outsource. Politicians face pressure to keep things slow and internal. Even the Department of Water and Power—right now—can’t deliver power to completed projects. Buildings are sitting 6 to 12 months without a certificate of occupancy because they can’t get connected.

There’s also fear around speaking up. I post on LinkedIn, and people text me privately: “Carl, I love that post.” But they won’t comment publicly because they work at a law firm, or they’re a developer in entitlements.

We’ve also lost LA’s corporate backbone. Major HQs used to assign executives to boards, fund civic initiatives, and provide social capital. That’s mostly gone now, so it’s up to the real estate community to stand up.

It’s not just developers who suffer—it’s the young creatives who can’t find an apartment under $4,000 in Hollywood. It’s the fact that 65% of our housing stock is antiquated, non-ADA compliant, unsprinklered, and underparked. What is LA offering them?

Sitting here on May 29, of 2025, the City recently passed the Hotel Workers Minimum Wage Ordinance. Thoughts?

Carl Muhlstein It's a tough one to address. Everyone should have a decent apartment, a roof over their head, etc., but $30 an hour, without delineating the class of worker, that means the valet who takes your car gets $30, plus $8 in medical insurance or health care benefits, even if they’re still on their parents' plan, or a spouse or significant other has them covered. It’s not just $30—it’s $38.

I suspect no new hotels will be built. Yes, we’ll have a bump because of the big events coming to LA, like the Olympics. But after 2028, I suspect we’re going to see thousands of rooms converted to residential. The 1,000-room Bonaventure Hotel, the 700-room Biltmore Hotel, the Biltmore Tower—many of these can’t survive with those kinds of labor costs.

Congratulations, City Council: you passed that, but now you're about to lose millions in bed tax revenue. You're about to lose good-paying jobs, as these hotels fold, and you're about to lose your incremental property taxes, because the value of these hotels is going to plummet, just like office buildings have…

What is your hope for LA 2028? What's your vision for it?

Jessica Lall …you don't want to just sort of go off a cliff after the Games. All of the Games are an incredible opportunity. They orient, they align, they give deadlines. You cannot underrate here, but I think we're just sort of, “Oh, the Games are coming and all of our problems are gonna go away.” That's not how this works.

You can put the fires and the tragedies that have happened in January on top of what was already sort of a monumental task. I think the need couldn't be greater.

…I'm hopeful, with some stability around political leadership. You know, to speak to the fragmentation, most people don't know, Downtown LA is represented by one predominant council member, but it’s in three council districts. That in and of itself is a challenge, right? We really have our work to do. I think the city needs to be honest about what is happening.

Unfortunately, I think you're seeing major employers and industries reduce their footprint greatly Downtown. They're not going to make some big exit—they're just going to do it. Understanding that, understanding what that does to the tax base, people on the street… I think if we had government workers back Downtown, that would also help. We need to be pursuing a variety of things relatively quickly, and then we need to sustain.

When you look at Metro ridership, it’s interesting because the Regional Connector opened last year, and we’ve seen ridership reach pre-pandemic levels for weekends, and even on Sundays, it has exceeded. That tells me that people are still coming Downtown for entertainment and sports.

They're not, though, using it to come to work, whether that’s because people aren’t coming down to work regularly, or they don’t feel comfortable taking the Metro… we need to be looking at these things interdisciplinarily—out of our silos—with the private sector, with small business, with residents, to put some wins on the board.

I will highlight a win: the Settecento restaurant that just reopened at Maguire Gardens, at the library. It seems to be doing extremely well. It’s always packed. I think people go, and they feel safe. It’s a beautiful restaurant. It’s such a visible corner right now where Bunker Hill meets City National Plaza, and I see people very excited about that, where it once was something people were maybe scared to walk by. It shows what activation can really do. If we can start to identify specific areas of Downtown to invigorate—and then connect in between—it’s very doable. We just have to really all be rowing in the same direction.

Carl, you've seen a few cycles through Downtown LA: are you hopeful? 

Carl Muhlstein Yeah…I've seen a lot of cycles, and what saved the Old Bank District was some new alternative retail, which the city enjoyed, but also government taking a stand to put the library into the old Ticor Title building, to occupy the Rowan Building, to occupy many of these, and people like Tom Gilmore pioneered the first office-to-resi conversions.

It wasn’t so complicated. Today, it’s much more complicated. Back to the comment that the real estate community has to get more involved and vocal—I miss the John Cushmans, the Nelson Risings, the Rob Maguires, the Wayne Ratkoviches.

Our next gen of developers, and we have a lot of great developers. I won’t call out any by name, but we have a lot of great 40-somethings out there who are doing incredible things, attracting institutional money. The city needs to make them feel welcome. The city has to invite, encourage them, and then get the Planning and the Building Departments on board.

How do we make this work? Because these, again, these PR stunts like ED 1, all they do is entitle a bunch of sites, and then the family or the developer who did that just lists it with Marcus & Millichap, and then no one shows up to buy it…We need to invite the next generation of residential, office, and creative office developers Downtown and turn it around.