Despite a 72 percent increase in residential construction, downtown Los Angeles’ central business district vacancy rate has only up-ticked to 4.7 percent.
Breitbart News recently noted that the average monthly rent for a one-bedroom apartment in Santa Monica is the most expensive in the nation at $4,799.20.
But it is not just Silicon Beach that is booming: the Los Angeles downtown business district (DBD) is in its biggest residential building boom since the 1920s, according to the Los Angeles Times.
CoStar real estate consultants have reported, via the Times: “Developers Increasingly Target Downtown Districts Where Millennials Work and Play.” The DBD apartment construction boom is still gaining momentum, but most of the activity had been focused in the now glutted central business districts (CBDs) of Seattle, Silicon Valley and Washington, D.C.
According to Kim Betancourt, director of economics with Fannie Mae, “Millennials are also directly affecting the revitalization of long-dormant urban areas in Detroit, downtown Los Angeles, Brooklyn, downtown Houston and Uptown Dallas, among other locales.”
CoStar documents that 42 downtown Los Angeles development projects of at least 50,000 square feet were completed in the past seven years; plus an additional 37 large projects that are currently are under construction. The current boom is still far from the Los Angeles CBD heyday that ran from 1920 to 1929. During an oil boom and the rise of Hollywood, 155 projects of at least 50,000 square feet were built.
The epicenter of the modern boom is the South Park neighborhood, the Times notes, which is seeing a flood of foreign investment over the last three years, as Chinese developers have led seven of the 18 downtown land deals valued in excess of $19 million, according to Transwestern.
Asian projects include the Metropolis from Shanghai-based Greenland Group coming to South Market, the Times notes, and the Oceanwide Plaza from Beijing-based Oceanwide Holdings going up across from Staples Center.
The Times adds:
Slated to be completed in 2019, the development will include 504 condos and 184 hotel rooms in three towers. There will also be 166,000 square feet of shops and restaurants and a massive LED screen wrapping the west side of the project overlooking Figueroa Street.
Oceanwide will have competition. Just across the street, Jamison Services Inc. and Hankey Investment Co., two Los Angeles companies, are joining up to build Circa — two 35-story towers with 648 luxury apartments and 48,000 square feet of retail.
Union leader Ron Miller, executive secretary of the Los Angeles/Orange Counties Building and Construction Trades Council, told the Times that he estimates that Metropolis and the Wilshire Grand construction projects have created 2,800 organized labor construction jobs that pay $60,000 to $65,000 a year.
Steve Basham, senior market analyst with CoStar Group Inc., suggests that despite the Los Angeles central business district building boom accelerating, supply is catching up to demand — which is why developers are offering four to five weeks of free rent to prospective tenants, the Times noted last year.
Basham told the Times that 3,700 apartments have opened downtown in the last 18 months, and another 6,260 are currently under construction. When those units are completed, they will boost downtown residences by about 15 percent to more than 40,000 residential units, but another 10,000 residential units are planned.