Work on L.A. Live began in 2007 with high expectations for sales of the Ritz-Carlton… (Gary Friedman, Los Angeles…)
More than half the units in downtown L.A.'s most prominent residential tower are finally sold as the region's long-suffering condominium market turns around, industry observers said.
Foreign investors and wealthy Southern California residents in search of a pied-a-terre have helped drive sales over the halfway mark at the Ritz-Carlton Residences at L.A. Live, developer AEG said.
The condos were planned during the housing boom of the mid-2000s, when AEG decided to crown its $2.5-billion L.A. Live entertainment, restaurant, office and hotel complex with 224 condos that would be serviced by the Ritz-Carlton hotel.
Work on L.A. Live began in 2007 with high expectations for sales of the residences on the top 25 floors of the complex's blade-shaped skyscraper. But by the time they opened in early 2011, the local condo market had stalled and the top of the tower remained mostly empty.
Some high-profile downtown condo developments from the period — including the Roosevelt and the Brockman Building, both conversions of historic office buildings — went through bankruptcy and have been turned into apartments.
Now, "the market is stabilized," said Alan Mark of Mark Co., a San Francisco marketing firm that tracks California condo sales. "Prices are going up."
The average price of a downtown L.A. condo last quarter was $619 a square foot, Mark said, 18% higher than a year earlier.
Inventory is disappearing because condo construction stopped during the downturn and many urban markets, including Los Angeles, are experiencing a rise in sales as apartment rents climb. A unit in the nearly-full Evo condo building near L.A. Live recently sold for more than $3 million, Mark said.
Recent buyers at the Ritz-Carlton Residences include investors from China and Korea who are purchasing units for use by their children attending USC or the Fashion Institute of Design & Merchandising, AEG Vice President Kimberly Lucero said.
About one-third of the owners live there full time, while others use their condos when visiting Los Angeles or attending events such as basketball games at Staples Center or concerts at L.A. Live, Lucero said. Three investors have purchased a combined total of 63 units that they intend to rent to tenants.
Units start at $1.3 million and reach $9.3 million for the largest two-story penthouse, Lucero said. She predicted that 75% of the units would be sold by the end of the year.
Demand for Westside creative office space remains strong
Companies in creative businesses that scorn traditional glass-and-steel office towers continued to rule the Westside real estate market in the second quarter as landlords scrambled to meet their demands.
While large spaces in some of downtown L.A.'s signature skyscrapers such as 72-story US Bank Tower lie fallow, homely old industrial buildings tricked out on the inside were in short supply, a report by real estate brokerage Industry Partners said.
Direct vacancy in the 17.7-million-square-foot Westside creative office market was 9.2%, the lowest level since the first quarter of 2009. Much of the growth is coming from established tech and digital media companies, including Google Inc., Apple Inc., Pandora Media Inc. and YouTube.
The trend is not expected to wane because media and tech companies plan to rent an additional 1 million square feet in the next 18 months, Industry Partners said.
As has been the case since the Internet boom of the 1990s, Santa Monica is the first choice for many creative firms. A shortage of available space, however, has helped push growth into nearby markets such as Playa Vista, Culver City and Marina del Rey.
The demand for creative space has caught the attention of well-capitalized institutional investors, including publicly traded Hudson Pacific Properties, which this year spent $89 million to buy an 11.5-acre collection of properties dating from the 1940s at Olympic Boulevard and South Bundy Drive in Los Angeles. It plans to make them into a creative office campus.