A developer has shelved plans to build a 30-story condominium tower in downtown Los Angeles, signaling the area's once blistering condominium market is cooling.

In another sign of a slowdown, increased numbers of individual owners unable to flip their pricey condominium units are trying to lease them, flooding the market with lower cost rentals.

Astani Enterprises Inc. had planned to construct two 30-story towers as part of its luxury Concerto project at Ninth and Figueroa streets. The first, a 350-unit tower, is under construction and should be completed in February 2008. But the second, a 271-unit tower, which was to break ground in June, has been put on hold.

Sonny Astani, head of the Beverly Hills development firm, said that given the state of the downtown condominium market and rising construction costs, the project does not pencil out, even though most units were to be sold for more than $600,000.

"It's not a good investment to spend $525 a foot to build over three or four years with the hope of netting $650 a foot," he said. "It's a horrible investment."

Astani is not alone.

High construction costs and a glut of product in the downtown market have caused developers to think twice. Between 10 and 15 proposed condo developments have been shelved or scaled back, according to real estate developers and brokers.

Most loathe to admit it publicly, said Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate.

"When you talk to the developers nobody wants to admit they are shelving it," Conway said.

At the same time, prices are dropping for condominiums that are being rented. In August, 81 downtown rental units were listed on Westside Rentals, a popular online rental marketplace, and the asking prices were generally in the $1,900 to $2,100 per month range. In October, 145 downtown rental units were listed, with average asking prices dropping to about $1,600 to $1,800.

"I think people are getting nervous," said Mark Verge, president and owner of Westside Rentals. "Owners bought this as an investment and now they have to rent their property. A lot of people thought about flipping them and now they have to rent them."

Astani waits

Of course, not all downtown residential development has stopped. Indeed, the area is still busy with construction and cranes are visible along the skyline.

Another condominium project by Astani called Vero, at 1234 Wilshire Blvd., is under construction. It will be completed in one month, with buyers scheduled to move in beginning Dec. 31. At a kick-off sales event on Nov. 11, about half of the condos at the 200-unit building were sold at an average price of $425,000, Astani said.


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