It’ll be months before the drone landing pad is installed to complete construction of downtown L.A. luxury condo tower Ten50, but potential buyers are already swarming the building.
In fact, well over 1,000 people have registered interest to buy one of the 151 units being built at 1050 S. Grand Ave.
Considering the strong demand for the complex – the first batch of new condos downtown in years – it’s probably no surprise that units won’t be cheap.
The San Francisco developer behind the project, Trumark Urban, has given the Business Journal the prices exclusively – and they’re high.
A 700-square-foot one-bedroom condo will start in the low $600,000s while a roughly 1,000-square-foot two-bedroom unit would cost nearly $1 million. Several penthouses will be available that could set buyers back more than $5 million each.
On average, a luxury condo at Ten50 will cost between $900 and $1,000 a square foot – but the price will vary based on the particular view each unit offers. For comparison, the average cost for a new condo in downtown was $803 a square foot in December, according to the Mark Co. in San Francisco, which tracks condo activity in urban areas.
Ten50 will include an elaborate amenity deck on the sixth floor complete with a screening room, private dining room plus conference and fitness centers. One of the finishing touches will be a drone landing pad, to provide a place for online shoppers to receive packages, should shipping companies such as Amazon and UPS ever decide to start delivering orders via drones.
Construction of the 25-story tower won’t be finished until October at the earliest, and the process of taking deposits has not yet started. But Ten50 is attracting interest from a wide range of potential buyers, according to Arden Hearing, Trumark Urban’s managing director.
“It really runs the gamut, but the common thread is just people who want to be downtown,” he said. “It’s not just the people who work at the law firms in the big high-rises. It really is attractive to a broad swath of people.”
A sales gallery – complete with vignettes of kitchen and bathroom layouts and video renderings of the project – is set to open Feb. 13 at 1057 S. Olive St., next to the construction site. Sales, however, won’t start until April 16.
Until then, Greenland USA’s $1 billion Metropolis project remains the only new condo development under construction selling units downtown. However, while sales have begun there, the first batch of condos aren’t expected to be available until December – two months after Ten50 opens.
That lack of competition is poised to create even more demand for Ten50, especially from those who want to move in sooner rather than later – and prefer to own, rather than rent, Hearing said.
“We have 10,000 new apartments under construction but if you want a new condo and you want to move in this year, you almost have no options,” Hearing said. “It’s really an unprecedented imbalance of supply and demand.”
Trumark Urban partnered with the Carlyle Group, a private equity firm in Washington, D.C., to buy the land in 2014. But plans for a 25-story condo tower were in place long before the joint venture took over.
The site’s former owner, Amir Kalantari, sought to build his own 151-unit complex, which he got approval for about a decade ago. But the housing crash put a damper on those plans.
Trumark Urban eventually acquired the rights to the $100 million project. And because the site was already approved for condos, the developer has been able to move fast.
The firm broke ground on the project in March. And by last week, construction crews were scheduled to begin pouring concrete for the tower’s 14th floor.
Including those at Ten50, about 1,700 condo units are under construction throughout downtown and an additional 3,000 are approved, according to Polaris Pacific, a residential sales and marketing firm in San Francisco.
Though it’s an increase from the condo activity seen in recent years, it falls well short of the 7,750 apartments under construction and the additional 4,820 approved rental units.
Even older, previously owned condos are in short supply. In December, for instance, only 94 units were listed on the market, according to the Mark Co.
At that rate, if the condos continue to sell at the same pace, the available homes would vanish within three months, according to the firm. A six-month supply is considered a balanced market, meaning neither the sellers nor the buyers have an advantage.
The lack of supply is largely because condo developments – much like the one previously planned on the site of Ten50 – came to a halt during the recession. Many developers and investors saw more value in the strong rental rates downtown, while lenders became far less willing to finance such projects, said Erin Kennelly, director of research at the Mark Co.
But, he added, that has certainly begun to change in recent years.
“Over the past 20 years, downtown has evolved from an edgy alternative for urban pioneers into one of L.A.’s great residential neighborhoods,” Kennelly said. “I think the pendulum will swing back toward condominium development.”
With nearly 68,600 apartment units available downtown – and the average asking rent for a two-bedroom at $2,130 a month, according to real estate information firm CoStar Group Inc. – it simply made less sense for investors to develop condo projects downtown instead of apartments.
But demand for condos has finally grown to the point where it’s much more viable to build for-sale residences to compete with the popular rental market.
The average cost for a unit in the Metropolis megadevelopment – which will include three towers of condos, a boutique hotel plus retail and restaurants – is about $1,100 a square foot.
But perhaps more importantly, the units are selling.
Of the 308 condo units under construction in the first Metropolis tower, which went on sale in April and are expected to be done by the end of this year, 235 – or 76 percent – were under contract as of last month, according to Polaris Pacific. In addition, since the 520 units in the second tower hit the market in October, 30 have been claimed.
Meantime, Beijing developer Oceanwide Real Estate Group plans to add about 500 units to its $1 billion mixed-use large development Oceanwide Plaza. That project broke ground in April but its condos have not yet gone on sale.
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