Downtown LA Development Boom Pits Condos Against Hotels
Officials from the Los Angeles Tourism & Convention Board estimate the city needs another 2,000 to 3,000 more hotel rooms within walking distance of the Convention Center
Condos are king in downtown Los Angeles' resurgent building boom, but it's hotel space that City Hall and the tourism industry are trying to persuade developers to build.
A series of mixed-use mega developments are in the pipeline, including the Grand Avenue Project near the Music Center, and Metropolis at the south end of Bunker Hill near LA Live.
Condominium buildings are the preference for developers looking to maximize investment return. But they are being urged to include hotels, with the belief that adding more rooms is essential for Los Angeles to land more convention business.
"We want more hotels. We're incentivizing hotels," said LA City Councilman Jose Huizar, whose 14th district includes downtown.
Officials from the Los Angeles Tourism & Convention Board estimate the city needs another 2,000 to 3,000 more hotel rooms within walking distance of the Convention Center. There is also a consensus that the aging Convention Center itself needs updating to make it more competitive with facilities in other cities. The West Hall was to be razed and replaced as part of the city's agreement permitting AEG to build the proposed Farmers Field football stadium. City officials, including Huizar, favor a "Plan B" for re-doing West Hall, even if AEG is unable to line up an NFL team before the Farmers Field agreement expires in the fall.
"The convention center is central to everything downtown," said Horacio LeDon, with the Douglas Elliman firm handling condominium sales for Metropolis.
Metropolis is poised to become downtown's next mega development, with construction scheduled to begin within a month on six acres between Eighth and Ninth streets. The first of two phases will include two towers, one dedicated to condominiums, the other intended to be a four-star hotel with a flagship brand to be announced shortly.
"They were willing to include the hotel, even though it's not as profitable,"said Huizar.
Hotel developers can apply for incentives, including the city waiving occupancy taxes. The decision is based on a study to determine if waiving the tax is essential to the economic viability of the project. In the case of the hotel in Metropolis, the decision is yet to be made, Huizar said.
The types of towers that will compromise the second phase of Metropolis, LeDon said, has not been determined. Huizar expects that both will be condominiums.
"Condo and high-rise living is something that's totally in demand," said LeDon. Most of the units in the first phase condo tower will be 1 to 2 bedrooms, he said, with some studios priced in their $400,000 range. Top-end units will be in the $4 million range.
A prominent feature of the design is an elevated outdoor concourse, or "podium," to serve as a commons 60 feet above ground level.
The Metropolis "city within a city" was first envisioned a quarter century ago. Even though the project obtained all required approvals to proceed, the plan remained stalled until the property was acquired in the past year by the American subsidiary of Greenland Holding Group, a China-based firm focused primarily on real estate development.
The city expedited review of modifications since the project was revived, and earlier this month, on May 14, the the Advisory Agency to LA's Planning Department issued a "Letter of Determination" enabling the project to proceed, according to Deputy Director Lisa Webber.
Douglas Elliman, the New York-based luxury real estate firm that only recently established a West Coast presence with an office in Beverly Hills, was ready to jump on the news. It had prepared a slick, 290-page magazine with an artist's conception of Metropolis on the cover, included as an insert with the Los Angeles Times newspaper in many of its home delivery areas.
The Metropolis location has become even more valuable since the opening of LA Live. The
two developments will be connected by one block of Francisco Street along which Marriott is preparing to open a Residence Inn and a Courtyard by Marriott in the same newly constructed high-rise. The effect is to create an expanded entertainment district, LeDon said.
Besides restaurants, clubs, and theaters, LA Live includes two hotels; a JW Marriott and a Ritz Carlton, along with condominiums, in adjoining buildings.
Another long-delayed project, Fig Central across Figueroa Street from Staples Center, is expected to be revived under the new ownership of Beijing-based Oceanwide Real Estate.
Huizar and LeDon are not alone in crediting AEG with getting the ball rolling for major projects south of the Bunker Hill office tower district.
"If it wasn't for for Staples Center and LA Live/Ritz Carlton, I don't know if we would be here," LeDon said. "I think AEG was the catalyst for everything big."
"The future of downtown is really entertainment. It's more residences," Huizar said.
via NBC Los Angeles