Now that the local economy is turning around and downtown L.A. is seeing substantial new investment, a local real estate development firm specializing in large apartment projects intends to build a 636-unit apartment complex just west of the Harbor Freeway.
G.H. Palmer Associates of Brentwood is purchasing the long-vacant former Thomas Bros. Cadillac property bounded by 7th, 8th and Bixel streets and the freeway and is planning a $100-million apartment complex featuring two five-story residential towers--with a swimming pool atop each--above two subterranean parking levels. Plans also include support retail space and an adjacent park where residents can play tennis and volleyball, said G.H. Palmer principal Geoff Palmer. He hopes to have the project completed within two years.
The plans seem to reflect increased interest in downtown living now that the new Staples Center sports arena is underway and other significant attractions are in the works. It would be downtown's first large non-subsidized residential development in several years.
"Downtown's market fundamentals are strong, apartment occupancies are above 95% and rents have been climbing," said Charles Loveman, whose Landmark Partners has consulted with a number of parties interested in downtown residential developments.
But many of the existing large apartment communities near the downtown core are "self-contained high-rise enclaves," Loveman continued, noting that the market would probably welcome a project designed to have more interaction with the street.
While native Angelenos might not be accustomed to the kind of high-density downtown living seen in Manhattan, Chicago and many other big cities, there's no shortage of out-of-towners living in L.A. who are perfectly comfortable with city-center residences, Loveman said. "Yes, it's a niche market--but in L.A. a niche can be 50,000 people," he added.
"The potential for developing more downtown apartments is significant, but the problem is" prohibitive land costs, said Stan Michota, a veteran downtown developer now serving as vice president of development with national giant Forest City Development's downtown office.
Improving demand from renters has enabled Forest City to raise rents substantially over the last year at its big Metropolitan apartment complex, where the percentage of occupied units is now in the high 90s, Michota noted.
"It's a good site," said Michota of the Thomas Cadillac property, adding that its slope could make it easier to incorporate subterranean parking.
Palmer said his firm will simply pursue a project that meets the site's residential zoning--a far cry from the ambitious office high-rise plans a high-powered development team began pursuing for the site in the late 1980s. Demand for downtown's office space was much stronger then, and high-rise development was expected to jump over the freeway into the Central City West district.
Developers Ray Watt and Kent Merselis led a group that bought the property and pursued plans for a major two-tower office complex dubbed Watt City Center. But that project, like many other downtown-area proposals--including the giant Los Angeles Center planned for the former Unocal headquarters property a few blocks north of the Thomas site--fell victim to the recession-related oversupply of office space.