BTW, for those who
love talking about highrises that are tall and shiny and expensive and city-like (that includes me!!)
, the web site of the parkfifth proj indicates their bldg will be 850 ft tall, making it the 3rd tallest in DT, 3rd tallest in LA. The only other skyscrapers that will be taller are the Library tower, at over 1018 ft, & the AON bldg, which is 858 ft tall.
Another thing I didn't know about the parkfifth proj is that the hotel portion will include space sold as a combo of extended stay hotel & condo type rms. I know that's a popular format [a timeshare] for bldgs in resort settings like Hawaii or Vegas----don't know how that will be received in DTLA.
And I hope one of the reps for the proj, who sounds like he's way overestimating future growth figures, isn't a sign the devlprs are pie in the sky type of ppl. Or ppl who might pull an Astani on everyone, where groundbreaking will occur and then...pfffftt. Or, worse, groundbreaking will be delayed so long that no one will even remember there was a parkfifth proj to begin with.
Downtown L.A. Developers Betting Against Condo Slowdown
By KEELEY WEBSTER
CREJ Staff Writer
Now that the condominium market in Los Angeles has been "normalized" for nearly a year, contrarian developers are constructing the tallest high-rise residential buildings that downtown Los Angeles has seen. Within a few weeks of each other, Houk Development Co. and capital partners Africa Israel and Namco Capital Group announced plans for the $1 billion Park Fifth, a high-rise condominium development and hotel that will have 732 units and 218 hotel rooms.
Developer Meruelo Maddux Properties has said it's moving forward with plans for a 36-story, $120 million condominium tower in downtown Los Angeles' South Park neighborhood. Both developers have timed their projects to come out of the ground and be completed in the same time frame.
"There is a huge renaissance occurring downtown," said Rich Marr, a project manager at Brentwood-based Namco Capital Group Inc. "We are not pioneers. We are looking at what has already happened downtown."
The project that would overlook Pershing Square was originally entitled as a mixed-use development with an office component in 1990, said David Houk, founder of Houk Development Co. Those plans, called Pershing Square Center, comprised a 700,000-square-foot tower with a hotel and retail component. Then the recession of the early 1990s hit just as financing for the project was coming together and Houk shelved plans for the project.
Houk and his capital partners decided now was the time to dust off the entitlements and move forward with a project that replaces office space with a condo-hotel project. Marr discounts talk that absorption in existing downtown condominiums has ground to a halt, rattling off numbers that indicate what he said would be a normal market in most places. "There has been an 8 percent year-over-year increase in pricing and an average 89-day holding period for units on the market," Marr said. "That is a normalized market anywhere else."
Price points have been set in Park Fifth to appeal to many levels of demand. The units, which range from 500-square-foot studios to 3,000-square-foot penthouses, are priced from $400,000 to $3 million. Marr is also banking on the 10 million square feet of office space within a one-mile radius of the project located on the corner of Fifth and Olive streets, just across from Pershing Square, to help stock the buying pool. "It may be a CPA who works late three nights a week or a guy like me who's an empty-nester and would rather have a place in the desert and another one that is close to work," Marr said. "There are a lot of different lifestyles and a lot of very successful projects in South Park."
The sales center, which will include life-sized models of its 732 condominiums, opens this summer. Groundbreaking is planned for first quarter 2008.
Betting on the Hotel Market
It's not just the downtown residential market that the Park Fifth joint venture is banking on, however. As a condo-hotel project, Park Fifth is also dependent on the health of the hotel industry. Park Fifth joins a slew of other hotel developers building in Los Angeles, where 965 units are projected to be completed by the end of 2007, according to Marcus & Millichap Real Estate Investment Services.
"Downtown L.A. is maturing. There is not a midweek hotel business," Marr said. "The average occupancy was 76 percent for the trailing 12 months. That is pretty good in the hotel business." Occupancy levels that high can't be achieved by just booking rooms on the weekend, said Marr, adding that this is an indication that business and convention guests are increasing midweek.
While both L.A. Live and Grand Avenue are receiving subsidies to make their hotels work, Marr said his model will work without them.
"We are selling hotel rooms as condos. L.A. Live has condos sitting on top of hotels," Marr said.
Buyers will purchase the hotel rooms, but are only allowed to use them 28 days a year. The rest of the time, the rooms will be available to be rented out to hotel guests. "It's easier to finance this model because the financing is based on the fact that we are selling the rooms," Marr said.
Marr said he has so much faith in downtown Los Angeles' hotel market that his company purchased the 469-room Los Angeles Marriot Downtown, located at 333 S. Figueroa St., from an affiliate of Blackstone Real Estate Acquisitions V LLC for an undisclosed price. This was a deal separate from the joint venture involved in the Park Fifth project. "We plan to invest a significant amount of money renovating that property," Marr said.
Marr, who said he has done a comprehensive analysis of the market, predicted that room rates three times as high as the current average could be achieved by the time the project opens in 2008. But Alan X. Reay, president of Atlas Hospitality Group, called a projection in which rates triple over the next few years
"simply unrealistic."
In 2005, the average daily rate for Los Angeles County was $104. In 2006 it went up to $113, an increase of 9.5 percent. For 2007, Atlas is projecting it to increase by about 8 percent and around 5 to 7 percent for 2008. "That is a far cry from tripling in the next few years, which would mean an average rate of over $350," Reay said.
Prev
Linear Mode
