LOS ANGELES | Downtown Project Rundown 4.0

[DistrictDirt]

Downturn? What downturn?!


Image: Downtown News

South Park to Get 32-Story Tower


Canadian Developer Eyes Summer Start for $100 Million Project
by Ryan Vaillancourt, Staff Writer

DOWNTOWN LOS ANGELES - Onni Group, a Vancouver-based developer that last year bought two Downtown properties, is quietly finalizing plans to build a 32-story apartment tower at Ninth and Olive streets.

The proposed $100 million development at 888 S. Olive St. would rise on a plot entitled in 2009 by LaeRoc Funds. Onni bought the site along with the adjacent Coast Savings Building from LaeRoc last year for $16.5 million.

The so-far-unnamed 283-unit tower is currently in the plan check phase of the permitting process and is on pace to break ground by August, said Chris Evans, Onni’s executive vice president. He said financing is in place to start construction, but declined to specify how the firm will fund the project.

Onni last year opened a five-person office in the Coast Savings Building, which will remain an office complex. The company also has offices in Chicago and Phoenix.

The bulk of Onni’s business is in Canada, where between greater Vancouver and Toronto the company has nearly 4,000 condominiums currently under construction, Evans said. It also owns and manages about 4,000 rental units between Canada, Phoenix and Chicago.

Most of Onni’s under construction developments are high-rises in urban areas. The company builds both apartment and condominium projects, but plans rentals for the Olive Street site. It also owns and manages about 4.5 million square feet of commercial space, including office, retail and industrial properties.

The firm has been eyeing the Downtown Los Angeles market since about 2004, Evans said. The company finally made its move last year when it also bought a 70,000-square-foot mid-rise office building at 1212 S. Flower St. That site includes an adjacent parking lot that Onni plans to develop with a residential building in the future.

“From looking at the Downtown market outside-in, we saw the market change significantly in 2008 and it basically stopped,” Evans said. “Obviously if that market would have lived another three or four years, Downtown would look significantly different than it does today, but we believe in that transformation and that it’s going to continue to happen.”

The proposed building, which is a slight variation on LaeRoc’s project, includes about 11,000 square feet of ground floor retail and a 663-space garage.

Cranes Hovering?

If all goes as planned, Onni’s project would open in 2015. It would also mark the first start on a Downtown high-rise since 2007, when Meruelo Maddux Properties (this week renamed Evoq) broke ground on the 35-story tower known today as the Watermarke.

Onni is not the only player looking to bring the cranes back to Downtown. Related Cos., developer of the proposed Grand Avenue project, continues to look for financing and hopes to break ground by October on a 19-story apartment tower, said Bill Witte, president of Related California.

Developer Sonny Astani said he plans to break ground this year on the 240-unit phase one of Angelena, an apartment complex at Eighth Street and Grand Avenue. A pair of seven-story rental buildings has been announced for 1340 S. Figueroa St.; construction is underway on a 210-unit housing complex at 1111 Wilshire Blvd. in City West; and work began this year on One Santa Fe, which will deliver more than 400 apartments to the Arts District. Chinatown Gateway will bring 280 apartments to that neighborhood in 2013.

“What this activity shows you is that the market fear that occurred in 2009 and 2010 has dissipated and the growth prospects for Downtown are very healthy,” said broker Mark Tarczynski, senior vice president at real estate services firm Colliers.

The return of high-rise development would mark the latest churn in a real estate cycle that hit doomsday in 2008 and saw seeds of recovery in 2010 as institutional investors increasingly looked to purchase multi-family housing projects. Now, the rental market in Downtown appears strong: Dallas-based MPF Research found that occupancy in Downtown apartments (including buildings in City West and other neighborhoods on the outskirts of the Central City) stands at 96.8%.

“There was a trend over 2010 of decreasing vacancy and increasing rents in Downtown and we’ve seen concessions disappearing and overall higher demand for apartment units,” said Tracey Seslen, a senior research associate with USC’s Casden Real Estate Forecast.

Prices are going up too. According to Colliers, Downtown rents jumped about 8% in 2011 over the previous year. There is some more supply in the pipeline: ST Residential’s 271-unit Apex (formerly Concerto) is due to open as apartments this year. So are the 88-unit Chester Williams Building and the 43-apartment Winston building.

Despite the current and planned activity, Tarczynski said the projects that are currently under construction — Colliers estimates that the market will add about 300 units per year for the next three years — represent a modest supply that won’t satisfy rising demand.

Still, even if demand appears to be mounting, Onni’s proposal is not an obvious slam-dunk. Related’s Witte said that, for most developers, high-rise construction is generally too costly compared to rental returns.

“The only way that makes sense, potentially, is if you’re really designing condos and the exit is that you convert to condos and sell them,” said Witte. “There are developers who are playing the cycles and will build condos now, rent them and look to sell them as condos when the market improves.”

The Related project is different because it includes a 20% affordable housing component, which gives the developer access to less expensive bond financing.

Onni’s Evans declined to comment on the company’s financing model, but he said the firm will leave a future door open to a condo conversion.

“Today we’re certainly looking from a rental point of view to make the project make sense and we’ll see what happens in the future,” Evans said.

[Illithid Dude]

YEEEEEEESSSSSSSSSSSSsS

Well, I'm calling it. Boom. This is 283 units. 700 for Angelini, or whatever it is called. iHope, which I am sure will start soon, is 300 units, One Sante Fe is 500 units, Wilshire Grand is 100 units, and the Grand Ave tower is 200 units. Over 1000 units means, to me, a boom.

The only thing is, while I am happy a tower is breaking ground, I think that this particular tower is somewhat ugly, especially around the base. I think, though, that there will be some minor design changes before it actually breaks ground, though, so I am not too worried.

EDIT: Here is a larger render.

Originally Posted by BrighamYen

I have heard thru the grapevine that he is not doing as well as we think financially from his rental properties. Makes sense when DD said he's trying to lease them out to ANYONE and EVERYONE to get cash flow in. This would be a perfect opportunity for a large company like Equity Residential to swoop in and snatch up these SB properties. They purchased Pegasus from KOR and did a very nice job revamping it in the lobby and on the roof. I know they're not PERFECT (who is?), but they're probably way better than SB management.

I wonder why? I mean, all these other developers do fine with their downtown properties. I'm guessing there is more to this story, something shadier, probably.

[Kingofthehill]

I would exercise caution in calling this recent rash of announcements an actual "boom." Until I see buildings actually breaking ground and under construction, anyways. We have been similarly let down in the past. At any rate, great news. The less car washes and parking lots in South Park, the better.

[Quixote]

I would prefer a shorter height if it meant building against the wall of the adjacent building.

That we are seeing more of these projects come out of the woodwork is encouraging, though.

[JDRCRASH]

What impresses me the most isn't the change of design, but the timeline this guy actually is aiming for. August is less than 5 months away!

Though, after taking a longer and closer look at the rendering, i do have a couple of concerns:

One, the second and third floors sure look like what appears to be a parking garage. If you look at the lower left portion of the podium, you clearly see a car coming out of a garage entrance.

Second, and perhaps worse, is that those glass/metal "plates" that are attached to the podium evidently only stretch across PORTIONS of the garage exterior, and not the whole thing. This means that, like 717 Ninth/Watermarke, if there is indeed a parking garage, some of the concrete will be exposed and visible.

Of course, unlike Meruelo's tower, this one will have retail.

[Illithid Dude]

Originally Posted by Westsidelife

I would prefer a shorter height if it meant building against the wall of the adjacent building.

That we are seeing more of these projects come out of the woodwork is encouraging, though.

I completely agree. Street walls, more then height, are the most important thing in an urban environment.

Actually, concerning design, the whole tower would look significantly better if they just took out that random blue glass design and made the podium more congruent with the actual tower.

Originally Posted by JDRCRASH

Of course, unlike Meruelo's tower, this one will have retail.

The Watermarke has retail in it, with a restaurant going in.

[JDRCRASH]

^ Maybe i'm thinking of a different tower.

Anyway i updated the rendering.

[Der Blut]

I'll believe it when I see the steel girders.

And why do all contemporary buildings look the same? YAWN.

I'll be moving to the Roosevelt once those are condos agains, or perhaps Eastern Columbia.

[citywatch]

Originally Posted by DistrictDirt

DOWNTOWN LOS ANGELES - Onni Group, a Vancouver-based developer that last year bought two Downtown properties, is quietly finalizing plans to build a 32-story apartment tower at Ninth and Olive streets.

The so-far-unnamed 283-unit tower is currently in the plan check phase of the permitting process and is on pace to break ground by August, said Chris Evans, Onni’s executive vice president. He said financing is in place to start construction, but declined to specify how the firm will fund the project.

oh my!! I don't think anyone saw that one coming. not just the location but the size of the proj too. it's a part of dt that I tend to overlook or gloss over. It's only when I'm around there that I suddenly realize just how much important land is in that section of dt, & how many gaps are on it & still need to be taken care of.

the only thing that makes this news a teeny tiny bit less good is that the parking lot it will replace is not as bad as it could be.....


maps.google.com

compared with the lot across the street....


maps.google.com

^ that's why the news is so unexpected. the location of the proposed tower is far off the beaten path, not where I'd have predicted major new devlpt to occur next, or way before everyone is old & gray. I've even have thought the NW corner of 9th & olive----shown in the 2nd pic----is where a new tower would go up before anything across the street.

I just hope the devlpr isn't doing the sleight of hand like the devlpr of the parkfifth or glass tower projs did a few yrs ago. That's where an owner makes it sound like his proj's timeline & financing are very firm, when they really aren't. I don't want to be looking at 9th & olive 5 months from today & seeing the same old parking lots, & then having to go...

[citywatch]

Originally Posted by BrighamYen

Citywatch, don't forget you thought the Regal Theaters would be too far to the west along the 110 freeway for people to make their way over from the rest of LA Live and now it's one of the busiest entertainment venues in DTLA on any weekend night! ;-)

you're right! I keep forgetting that one But I now remember posting an article about how the movie theaters at LA live are among the highest grossing ones in the regal cinema chain.

I guess that still hasn't totally sunk in yet, but not so much due to the location in dt, but cuz the movie business has been down just about everywhere. I also recall walking around the yard house not too long ago & thinking that if the regal theaters were directly across from that part of la live, there would be more connectiveness between all the parts. I can see some ppl wandering around there & not realizing there are movie theaters on the other side of the marriott hotel, or ppl at the theaters forgetting that LA live sits farther to the east.

[citywatch]

Originally Posted by DistrictDirt

Lastly- this is totally rumor, but I heard through the grapevine that Barry Shy instructed SB Tower management to not be as selective as normal with the applications, so they could fill up the building quickly. I heard that there have been a lot of evictions from people who had no business living there in the first place that stopped paying rent. Crazy.

that doesn't sound too reassuring. any bldg that's nice or ok today could easily become a slum in the future. that's one thing I realize about parts of LA that looked perfectly fine over 50 yrs ago, but have since fallen on hard times & become very divey.

Originally Posted by Illithid Dude

Barry Shy is a plague upon downtown. All his buildings are crazy ugly and crazy cheap. His adaptive reuses look like shit, and he destroyed the beautiful mid-century architecture of his Shy Barry Tower,

don't know why you say his bldgs are ugly when aren't they all adaptive reuse projs? iow, if they're fugly today, then alot of blame has to go to the architects from the early 1900s who originally designed the bldgs he's since taken over.

Barry shy is a major owner of bldgs around spring st, so if he can't keep his investments in good shape, the whole hood will suffer.

[StethJeff]

this building is fine but south park better not become a sea of identical vancouver glass boxes.

[Der Blut]

Originally Posted by citywatch

don't know why you say his bldgs are ugly when aren't they all adaptive reuse projs? iow, if they're fugly today, then alot of blame has to go to the architects from the early 1900s who originally designed the bldgs he's since taken over.

Not the architecture, but what's he's done to them. The common areas are okay, the hallways extremely narrow, etc. But it suits the caliber of people that currently live there. It's a rental though. What can you really expect?

Look at the Rowan retail. We've waited for good tenants and we have them. Some people just want butts in the seats if you know what I mean.

[alki]

Originally Posted by pesto

This is about what I said a day ago, only for once, I was a lot more subtle. You are going to try to attract artsy types into cheap SRO units and not allow drugs? Sounds more like a comedy routine than a plan for improving a neighborhood. How many drug free parties do you think there will be there? And, of course, dealers tend to congregate where the customers are.

Not all artists do drugs and not all people who do 'do drugs' are addicts. Solid screening is critical when managing property coupled with good managers on sight and consistent monitoring of the site. I had 3 evictions in 14 years and I rented to mostly 20 and 30 somethings....... who were mostly artists, musicians and people in The Industry.

And btw one of those buildings had been a major drug den where there was drive thru service..........users would drive up onto the lawn and the dealers would hand the drugs out thru the windows. And oh yeah, we found bullets in the hallway walls all throughout the blding where there had been gun fights between dealers.

With the proper mgmt, those SROs can be very successful and contribute to reducing the affordability problem for artists in DTLA.

[alki]

Originally Posted by dachacon

doubt it. LA Center Studios is the only place i can think of. The old distribution center makes a perfect studio location. A cheap very large continuous floor plate. besides it rehabs a building that would other wise sit empty.

I have to believe there are one story buildings that would have fit the bill esp in the Artist District and in the industrial sector where that new clothing manu. just opened up its operation. Hell, I bet there are still doable one story buildings in southern South Park.

I just don't think there is a committment to DT by the entertainment industry.........and that industry still wags the dog's tail in LA.

[Illithid Dude]

Originally Posted by citywatch

don't know why you say his bldgs are ugly when aren't they all adaptive reuse projs? iow, if they're fugly today, then alot of blame has to go to the architects from the early 1900s who originally designed the bldgs he's since taken over.

Barry shy is a major owner of bldgs around spring st, so if he can't keep his investments in good shape, the whole hood will suffer.

It's not that the buildings themselves are ugly, but how he has adaptivley reused them. Pipes stick out of windows, HVAC leaves gashes in facades, bottom floors are covered in cheap stucco. However, there is a bright side. One developer just won a lawsuit to take over the ground floor of Shy Barry Manhatten, which he plants to restore to its original state and turn into a cafe or something.

[alki]

Originally Posted by citywatch

that article is another reminder of just how much is going on in the dts of cities all over the country. So what was once exceptional in a few cities is becoming increasingly common everywhere.

I read this about Indianapolis & it sounds not much different from what's been happening in dtla....:

The Marriott Hotel in Indy is a piglet......its the big blue monstrosity in this pic:



Don't let that happen to DTLA.

[alki]

Originally Posted by BrighamYen

Sorry haven't checked SSP in awhile so didn't see your post until now!

I really don't know how much it cost to build the freeway cap park in La Canada. I did not see any ventilation system set up at all because I don't think it's wide enough to be a major issue for cars underneath. You zoom by so fast underneath while driving that there's no risk at all for "suffocating."

Downtown LA's 101 freeway cap park would be a lot longer obviously like an actual tunnel for the drivers underneath. But then again, it may be about as wide as the tunnel underneath LAX (right under the runways) and does that tunnel have ventilation???

Ventilation really ups the bill. I hope a system isn't necessary when capping the 101. What I always hoped for when they capped........that they built retail along the edges of the bridges that served both pedestrians on the street as well as people enjoying the parks. Their taxes could be used to help pay for maintenance of the parks and the public debt that would result from the capping. And the retail would help connect the westside of DT with DT proper.

[alki]

Originally Posted by DistrictDirt

Brigham I think you nailed it. Something else I just thought about- the fact that SB Tower is rental. 99% of renters are fine (hey, I've been renting my whole life, and I feel like I"m an upstanding tenant) but you always have that 1% that feels like "this is temporary, I can treat the building and my neighbors like shit). My point being, when everyone has a stake in the building, they tend to behave better. So I'm guessing that the Rowan and Dorado - also on Spring St, attracts a different crowd.

Lastly- this is totally rumor, but I heard through the grapevine that Barry Shy instructed SB Tower management to not be as selective as normal with the applications, so they could fill up the building quickly. I heard that there have been a lot of evictions from people who had no business living there in the first place that stopped paying rent. Crazy.

You are so right. I never had to advertise for new tenants. MY tenants felt they had a good thing going and they would recommend their friends to the building. And they were good people. And because they all knew each other they were more respective of boundaries. And when someone got out of line, they would all jump on him or her and get that person back in line. That really kept the building running smoothly.

[alki]

Originally Posted by DistrictDirt

Downturn? What downturn?!


Image: Downtown News

South Park to Get 32-Story Tower

I think its a good looking building. There are sleeker/slimmer buildings in Vancouver but I think this building will look good in DTLA.