Every major city has its coveted zip code – Beverly Hills in Los Angeles, Manhattan’s Upper East Side, or London’s Mayfair. But savvy real estate investors often find opportunity in what we call “premium adjacent” locations – areas that leverage their proximity to these prestigious neighborhoods while offering better value propositions. We are working on a project whose location can be described as Beverly Hills adjacent and while we all smile when we know the true boundary of Beverly Hills, it reminded us of the value of these locations.
The Beverly Hills Adjacent Phenomenon
Beverly Hills spans just 5.7 square miles, but its influence extends far beyond its borders. There are several luxury hotels in Los Angeles touting a Beverly Hills location that are technically in Los Angeles, demonstrating how businesses can successfully leverage prestigious neighbors. These properties offer comparable luxury experiences while benefiting from a location with potentially location operating costs and more future upside.
This Pattern Repeats Globally
• Brooklyn Heights capitalized on its proximity to Manhattan, transforming from Manhattan-adjacent to a sought-after destination itself
• London’s Battersea rode the coattails of neighboring Chelsea to become a luxury destination
• Miami Beach’s Mid-Beach district emerged between South Beach and North Beach, offering luxury without the intense tourism
Why Adjacent Areas Make Strategic Sense
Premium adjacent locations often represent smart investments because they:
• Offer lower entry costs while benefiting from proximity to established luxury areas
• Have more room for appreciation as the area develops its own identity
• Can capture overflow from saturated premium markets
• Often have fewer development restrictions and better opportunities for innovation
The Evolution Pattern
The most successful adjacent areas often follow a predictable path: They begin by leveraging their proximity to prestigious neighborhoods, then develop their own unique identity. West Hollywood exemplifies this evolution, transforming from “Beverly Hills adjacent” to a distinctive luxury destination with its own appeal.
Investment Implications
For investors, identifying these emerging adjacent areas early can yield significant returns. The key is recognizing locations that combine:
• Immediate proximity to established luxury districts
• Independent development potential
• Favorable regulatory environments
• Infrastructure improvements or planned developments
These premium adjacent locations often represent the sweet spot between established luxury and emerging opportunity, offering investors the best of both worlds.
At LHA we work with off market hospitality assets and many times have access to properties in unique locations. For a confidential conversation, send an email to Teresa Holden at [email protected].
More Articles in the LHA Library
Additional articles on luxury hospitality are available at the LHA library.