LOS ANGELES | Downtown Project Rundown 6.0

[LAsam]

Originally Posted by LosAngelesSportsFan

We went last week to Lucky Mizou and Wanderlust and it was awesome. Pretty busy for a wed and the whole concept is incredible. Eight different bars, clubs, restaurants. This will be a massive boost for downtown LA

I'm happy to hear this is doing well, but I can't help but think how much more beneficial it would be for downtown to have 8 new bars, clubs, restaurants occupying street-level retail spots rather than all being tucked away up in a high-rise. Hopefully the continued success of places like this will result in more of the street-level stuff that makes downtown feel vibrant and more welcoming to walk around.

[craigs]

Sorry, I don't see the downside here. It's an awesome new hotel complex with over 700 rooms and eight bars/restaurants, and it is right next to the downtown convention center, arena, and entertainment complex. It is situated in such a way that all kinds of different people will be able to completely ditch their cars (and Ubers) and walk to and from the various, proximate attractions. That is a win-win.

[LAsam]

Originally Posted by craigs

Sorry, I don't see the downside here. It's an awesome new hotel complex with over 700 rooms and eight bars/restaurants, and it is right next to the downtown convention center, arena, and entertainment complex. It is situated in such a way that all kinds of different people will be able to completely ditch their cars (and Ubers) and walk to and from the various, proximate attractions. That is a win-win.

I don't mean to say there's downside. I intended to say if we could get this additional infusion of retail occupancy at street-level throughout South Park it would go even further to improving the overall pedestrian feel for the area. I was downtown last Friday and the South Park area felt a bit desolate at street-level compared to how it did pre-Covid... that's what made me think this.

[LosAngelesSportsFan]

Originally Posted by LAsam

I'm happy to hear this is doing well, but I can't help but think how much more beneficial it would be for downtown to have 8 new bars, clubs, restaurants occupying street-level retail spots rather than all being tucked away up in a high-rise. Hopefully the continued success of places like this will result in more of the street-level stuff that makes downtown feel vibrant and more welcoming to walk around.

I agree but this concept works so well because all the bars and clubs are intertwined. Now, i wish we had 8 more bars and clubs on the ground floor as well, but there is the entrance bar at the hotel, Maestros around the corner, Javiers coming soon so a nice little area forming. Need the second tower for this project to happen, Oceanwide to get completed and a few of the lots on Flower to be developed and it can be a great area.

[SoCalKid]

This concept looks very Vegas in a good way. I love it, what a great, unique addition to DTLA.

[Doctorboffin]

I remember last month someone mentioning that pre construction work was going on for the Fashion District Tower, does anyone else have any news on that? A project like that going through would be a real game changer for the area.

[zonedgreg]

I think someone earlier was asking or complaining about how so many of these larger projects keep getting proposed but don't end up getting built in LA recently. I underwrite these types of developments all the time, I do a lot of development around the nation.

Principle reason why larger developments haven't been getting built over the past year or so is a combination of rising interest rates, tightening bank lending standards which impact not just costs but also investor return requirements, rising construction costs and flattening rents.

Now, more recently, construction costs have flattened out a bit and rents are generally still growing albeit a little slower. Interest rates continue to rise and lender requirements have become suuuuuper stringent. It was just about a year ago you could get a 80% LTV construction loan at maybe a 4-5% interest rate. So you only had to raise 20% equity.. that's way less risk for the equity investors

Now you might get 44-50% LTV construction loan at 9-10 or 11% interest rate so your debt costs go up a tonnnn and your equity requirements / risk to investors goes up a ton as well. If their risk goes up, they require a much higher return. If they require a higher return, then you have to underwrite higher rents + income or somehow get a better deal on construction costs (which doesn't happen) or both.

So a lot of developers right now are just proposing these projects and going through the entitlement process to get them approved to then maybe like 1-2-3 years from now when maybe interest rates start to come down, economy cools and construction costs come down a little or flatten, then by then they would have the entitlements so they can break ground or they can sell that entitled land to a developer that would actually build shortly after acquiring that land.

So LA development may seem lackluster now, but when conditions improve / once all these developers get entitlements, we may see one of LA's biggest building booms in decades.

[LA21st]

I work at a big commercial real estate firm and it's not just downtown LA that's not doing well.

Our Atlanta/Dallas projects are pretty much on hold going into next year, and Florida isn't doing much better. Chicago is a mixed bag. NYC is ok I guess. Houston, eh. DC, eh. Austin, so so.

The only place that seems to be better than average is Silicon Valley really. Maybe Boston/Seattle? The places with tons of Bioscience/life sciences are doing the best from what I've seen. Everywhere else is struggling.

[citywatch]

• Video Link


abc

[hughfb3]

This picture is a week old as they already have another floor of glass set above this one and another floor of concrete

[colemonkee]

Man, my fears on this one are founded. The spandrel glass is pretty awful. The corner floor-to-ceiling glass looks good though, so hopefully that balances it out.

[LosAngelesSportsFan]

Originally Posted by zonedgreg

I think someone earlier was asking or complaining about how so many of these larger projects keep getting proposed but don't end up getting built in LA recently. I underwrite these types of developments all the time, I do a lot of development around the nation.

Principle reason why larger developments haven't been getting built over the past year or so is a combination of rising interest rates, tightening bank lending standards which impact not just costs but also investor return requirements, rising construction costs and flattening rents.

Now, more recently, construction costs have flattened out a bit and rents are generally still growing albeit a little slower. Interest rates continue to rise and lender requirements have become suuuuuper stringent. It was just about a year ago you could get a 80% LTV construction loan at maybe a 4-5% interest rate. So you only had to raise 20% equity.. that's way less risk for the equity investors

Now you might get 44-50% LTV construction loan at 9-10 or 11% interest rate so your debt costs go up a tonnnn and your equity requirements / risk to investors goes up a ton as well. If their risk goes up, they require a much higher return. If they require a higher return, then you have to underwrite higher rents + income or somehow get a better deal on construction costs (which doesn't happen) or both.

So a lot of developers right now are just proposing these projects and going through the entitlement process to get them approved to then maybe like 1-2-3 years from now when maybe interest rates start to come down, economy cools and construction costs come down a little or flatten, then by then they would have the entitlements so they can break ground or they can sell that entitled land to a developer that would actually build shortly after acquiring that land.

So LA development may seem lackluster now, but when conditions improve / once all these developers get entitlements, we may see one of LA's biggest building booms in decades.

Very good insight and I agree. I think by 2026 / 2027, we're gonna see a ton of projects uc

[LosAngelesSportsFan]

Originally Posted by colemonkee

Man, my fears on this one are founded. The spandrel glass is pretty awful. The corner floor-to-ceiling glass looks good though, so hopefully that balances it out.

I thought of you as soon as I saw this in person lol

[Zapatan]

I was expecting better but hopefully the crown makes up for it.

I'm more excited about some of the other 500+ foot projects tbh.

[Doctorboffin]

I'm going through my map of LA skyscrapers, and man, so many have completion dates that are expired.

Albany, Morrison Hotel, the Red Wood inspired tower, were all supposed to break ground last year. Time's Mirror Square was approved in 2021, so was the Crescent Heights tower, World Trade Center apartments, 1111 Sunset, and Olympic tower. Pershing Square tower and Olympia were approved all the way back in 2019.

It's the same all across the city, especially in Hollywood. In fact the number of high-rises that are on track is looking incredibly slim. Excluding anything proposed in the last year or two, it's basically just several Onni projects outside of downtown, some stuff in the Arts District, and 8th and Grand.

Obviously COVID shook up anything proposed/ approved before 2020, but there are so many buildings that were supposed to break ground in the last few years, and nothing's happened. Interest rates? Supply chain issues? Obviously bureaucracy is to be blamed for so many things never even making it to the approval stage, but what gives with all these approvals just sitting there gathering dust?

[Radio5]

Originally Posted by Doctorboffin

I'm going through my map of LA skyscrapers, and man, so many have completion dates that are expired.

Albany, Morrison Hotel, the Red Wood inspired tower, were all supposed to break ground last year. Time's Mirror Square was approved in 2021, so was the Crescent Heights tower, World Trade Center apartments, 1111 Sunset, and Olympic tower. Pershing Square tower and Olympia were approved all the way back in 2019.

It's the same all across the city, especially in Hollywood. In fact the number of high-rises that are on track is looking incredibly slim. Excluding anything proposed in the last year or two, it's basically just several Onni projects outside of downtown, some stuff in the Arts District, and 8th and Grand.

Obviously COVID shook up anything proposed/ approved before 2020, but there are so many buildings that were supposed to break ground in the last few years, and nothing's happened. Interest rates? Supply chain issues? Obviously bureaucracy is to be blamed for so many things never even making it to the approval stage, but what gives with all these approvals just sitting there gathering dust?

You just answered it. But also, the ULA tax, the new rent control law on new buildings, and the eviction moratorium is still very fresh in developers/landlords minds (people still have till march of next year to pay back). There are much better markets to do business in. The upcoming world cup and olympics will be our only saving grace when interests rates go down.

[Zapatan]

Originally Posted by Radio5

You just answered it. But also, the ULA tax, the new rent control law on new buildings, and the eviction moratorium is still very fresh in developers/landlords minds (people still have till march of next year to pay back). There are much better markets to do business in. The upcoming world cup and olympics will be our only saving grace when interests rates go down.

I really hope so, I wonder realistically how many of the current proposals have a shot, LA is a hot place to live, you'd think there'd be more of a market for condos there, even considering interest rates.

[Radio5]

Originally Posted by Zapatan

I really hope so, I wonder realistically how many of the current proposals have a shot, LA is a hot place to live, you'd think there'd be more of a market for condos there, even considering interest rates.

California is the worst place to do condos due to laws that makes it super easy for HOAs to win lawsuits. Multi family construction will come back in full swing though come 2025.

[caligrad]

You would think that the City/state government, when it was announced that LA would be hosting the 2028 Olympics that they would have slashed red tape and made it easier for the city to oh idk, look more impressive and presentable? ha-ha, instead they did the opposite. Now watch all of a sudden in the next 2 years there will be a scramble to figure out how to hide the homeless and to have cranes dotting the skyline as if we're booming again. Not being pessimistic by any means or a negative nancy, just annoyed with the idiots running the show in city hall. SOOOOO many things like the housing crisis, exodus, corporate exodus, crime and homeless could be solved with a swipe of a pen but state/city leaders just shrug it off as if its there's nothing they can do. Its so absurd and odd.

[craigs]

$2-billion Fourth & Central development continues to inch forward in DTLA

Including a 44-story tower designed by David Adjaye

Steven Sharp
Urbanize Los Angeles
October 16, 2023

A $2-billion plan to redevelop a cold storage facility on the border between the Arts District and Skid Row has cleared another milestone: the release of its draft environmental impact report.

The project from Denver-based Continuum Partners, announced in April 2021, is would rise from roughly 7.6 acres of land at and around the intersection of 4th Street and Central Avenue. Existing buildings and parking lots are slated to make way for a new mixed-use complex which would feature mid-rise and high-rise structures featuring housing, offices, a hotel, and commercial uses, as well as open space.

If fully built out, the development would consist of more than 2.3 million square feet of new construction, highlighted by 1,521 residential units - including 949 rental units, 572 for-sale homes, and 214 units of affordable housing. Other components of the project would include roughly 411,000 square feet of offices, approximately 45,000 square feet of retail space, nearly 56,000 square feet of restaurant space, and a 68-key hotel

Studio One Eleven leads the master plan and building design effort for the site, which would retain and convert some of the early 20th century buildings on the property for commercial uses, while adding new structure up to 44 stories in height. Plans also call for roughly 90,000 square feet of new publicly-accessible open space, which would break up the superblock with pocket parks, plazas, and walkways which connect Central Avenue with Alameda Street to the east.

The visual centerpiece of the project, a 44-story tower at the northern edge of the property, is being designed by National Museum of African American History & Culture architect David Adjaye - his first ground-up project in Los Angeles. Adjaye is also designing the proposed hotel.

“We are excited to have reached this critically important stage in the review process of our plans for Fourth & Central. It brings us one step closer to being able to realize all the many community benefits that will accrue from our proposal. We have said from day one that we want our proposal to be a model for delivering housing for all, community placemaking, and durable job creation in the most environmentally friendly way pAs was the case when we last heard from the project, construction Fourth & Central could begin as early as 2025 and would occur over multiple phases. However, the project must first receive several discretionary entitlements from Los Angeles city officials, including a zone change, a general plan amendment, and a development agreement.

While Continuum Partners is based out of Denver, the company already has some experience in the Downtown Los Angeles. Continuum previously completed a 100,000-square-foot office building on Santa Fe Avenue in the Arts District, and has received approvals for a larger 14-story tower on a neighboring site. ossible. This project is a demonstration of how Downtown LA, as the hub of the region's substantial new transit investment, can evolve to address both the community's pressing housing needs and critical carbon emissions targets. Continuum is proud of our strong 25+ year track record of projects that deliver on our promises."