Class A office values rose significantly again in 2017. Firms like Douglas Emmet paid over the $1000 per square foot price for prime class A office buildings. Cap Rates are now below 5% for most office classes on the Westside. Recently, Artisan Realty Advisors paid over $1000 psf. for 520 Broadway in Santa Monica. This price is significantly greater than the 1984 value of $182 psf. and the 1993 recession low of $71 psf paid by Kennedy Wilson. Several buyers have significantly upgraded this 1982 Herb Nadel designed office building over the years.
Marcus & Millichap predicts in their 4th Quarter Apartment Report for Los Angeles that 18,000 units will be completed in the next 12 months, while 2017 completions will be closer to 12,000 units. Although more units have been completed in the last 36 months than in any other 3 year period since the 1980s–apartment completion are still significantly below the 1980s. An 18,000 unit year is a horse of a different color. This increase would begin to rival the 1980s when supply did exceed demand. In any case. M & M forecasts vacancies rising from 3.6% to 4.1% in 2017. Despite the muted supply–Marcus and Millichap sees absorption in 2017 slowing from previous years. Perhaps, rents, which continue to increase, are now outstripping incomes–even at the higher income levels. Over half of the deliveries are in downtown Los Angeles. M & M forecasts downtown vacancies increasing from under 4% to 5.4% at the end of the year. Developers are offering incentives to rent their units. Although this absorption problem will put pressure on effective rents and make Downtown landlords more vulnerable to a recession–the new apartments will continue to cement Downtown as the upcoming new Los Angeles burb for upper income residents.
PMI is proud to announce that the Dumont Project, an advertising and marketing firm, recently amended their lease to take over suites A130 and A100 at our commercial property located at 4223 Glencoe Ave. in Marina Del Rey. The firm now occupies 5,810 sq ft of office space, the largest allocation of space for one tenant in the building.
The Dumont Project is a consultancy that specializes in growing brands by providing services in analytics, creative development, digital marketing, and media management. They work with a wide range of clients, including Vineyard Vines and M&M.
With the expansion of gentrified areas south of Silverlake and Echo Park, Creative Multifamily has remodeled and leased up an apartment building at 306 Bonnie Brae street, one block south of Temple Street. This new property is located within walking distance of Echo Park Lake and shops and restaurants along Sunset Boulevard.
306 Bonnie Brae consists of 9 2-bedroom, 1-bathroom units that have been completely refinished and equipped with modern amenities, brand-new stainless appliances, and in-unit washer and dryer. Each unit has an efficiently designed layout, hardwood floors throughout, and lots of natural light. The property is privately enclosed with bamboo and a beautiful new redwood fence.
Many other developers have also moved South; there are five new large scale apartment projects being developed along Temple Street, with two bedroom rents starting at $2,700 per unit.
Creative Multifamily’s recently renovated an apartment building at 5515-5525 Media Drive in Highland Park, northeast of downtown LA. Highland Park is burgeoning as young, urban creatives flock to the area for its proximity to Downtown, Pasadena, Glendale, and Burbank. This property, surrounded by historical craftsman homes, is situated perfectly for what the neighborhood has to offer. It is close to the Goldline light rail station, retail on Figueroa Street, hip bars, and restaurants that are all revitalizing Highland Park. Recently named one of LA’s hottest up-and-coming markets by Redfin and LA’s greatest neighborhood by LA Weekly, Highland Park now offers the same unique qualities and amenities that have made Silver Lake and Echo Park go-to locations for the hip and creative classes.
The property consists of 2 adjacent buildings composed of 16 units. Each unit is completely remodeled and has its own washer, dryer, and new stainless steel appliances. Some units have unique polished concrete floors and large private patios, almost as large as the units themselves. We also converted some one bedroom units to micro two bedrooms of just over 600 square feet. The layout for each unit was redesigned to maximize living space, emphasize natural light, and accentuate architectural elements. These apartments, with their spacious layouts and modern finishing, are perfect for the young creatives that inhabit Highland Park.
PMI has completed construction at 251 Rosemont Avenue, a bamboo-enclosed, bungalow-style apartment complex adjacent to Echo Park and downtown Los Angeles. With the growth of hip neighborhoods around Echo Park, PMI has expanded south of highway 101 to Rosemont Avenue, immediately south of Temple Street.
This newly renovated property consists of 9 separate buildings and 10 trendy units that have been modernized to maximize natural light and space efficiency. Each unit is a separate bungalow and boasts its own washer and dryer, large private patio, high ceilings, and a totally contemporary look. Some units even have exposed wood ceilings, similar to those found in creative offices.
The inability to develop high density apartments in Echo Park and Silver Lake has driven apartment developers towards Temple Street, one half block from Rosemont. More than five new large scale apartment projects have been – or are being – developed along Temple Street, with two bedroom rents starting at $2,700 per unit. Even more of these projects are still in planning. These new developments contribute to the rapid gentrification of Temple Street, just south of Echo Park and Silver Lake.