LOS ANGELES—With more than 1,000 units in the pipeline, Century West Partners is on the forefront of multifamily trends in the Los Angeles market, including the trend toward rental units. In this exclusive Q&A, GlobeSt.com sat down with the company’s principal and vice chair of Fifield Companies, Randy Fifield to find out about the evolving multifamily market, how it is leading the commercial real estate space and what Century West looks for in development opportunities.
GlobeSt.com: What are L.A.’s most sought-after neighborhoods?
Randy Fifield: There are 14 markets: Santa Monica, Marina del Rey, Playa Vista, Culver City, Koreatown, South Park, Arts District, Financial District, Glendale, Pasadena, Westwood, Beverly Hills, Hollywood, West Hollywood. The very hottest action is in Hollywood, Koreatown and South Park. What these three submarkets all have in common are high-walk scores, lower rents than West L.A., superior public transportation and other attractive urban qualities. Many of these other high-rent submarkets have little land available, difficult approval processes and seem to be supply constrained. This drives renters to nearby markets where more supply is available. For example, the lack of new supply in Santa Monica and Venice is being satisfied in Marina del Rey and Playa Vista. But those areas are running out of supply too. Who will meet west side demand? El Segundo? Downtown LA? Additionally, more onerous development fees and other conditions have driven rents up in markets like Santa Monica to $4 to $5 a month per square foot. This makes mid $3-per-square-foot rents in Hollywood and South Park a better value. While there’s great tech job growth in West L.A., housing isn’t being built to keep up with the job growth in those areas. Eventually employers will move to where their employees can find housing.
GlobeSt.com: What are some of the key trends in multifamily design, and how do you integrate technology?
Fifield: We put in more amenities and better finishes and fixtures than condos built five years ago, like gyms, business centers, because 20% or more of our tenants work from home, party rooms with kitchens, extensive outdoor areas with grills and dining stations, secure bike storage with bike kitchens, concierge services and 24-hour security. Interior units have kitchens with upscale cabinets and stone or quartz countertops and Grohe fixtures. Bathrooms also have stone or quartz counters along with oversized tubs and double-bowl vanities in select 1-bedroom and 2-bedroom units. The units have generous closets, USB ports and in-wall speakers with Bluetooth amplifiers. People don’t rent, they buy a pampered, amenitized lifestyle.
GlobeSt.com: What demographics do your properties target, and why?
Fifield: Our target market is 25-40-year-old professionals, mostly college graduates with median incomes around $100,000 per annum. They’re sophisticated consumers who could buy but choose to rent.
GlobeSt.com: There is a lot of talk about the preference to rent, but there are several new condominium developments in the pipeline throughout the city. What is your take on the rent vs. for-sale condo discussion?
Fifield: The rent versus own discussion is overplayed for four reasons: firstly, apartments and condos are like comparing apples to oranges. Writers compare the mortgage payments on similar sized condos to rents on apartments, but apartment rents include real estate taxes, insurance, repairs, utilities, support staff, etc. When you add condo assessments, real estate taxes and mortgage payments together, those total costs exceed rents. Renting is still a better value. Secondly, many condos don’t offer as many amenities and services as many rental buildings do. Additionally, people want flexibility. Your lease is generally one year. When condo owners get a transfer or have a change of life (marriage, baby, loss of a job), sometimes it takes years to sell, and sometimes at a loss. Finally, apartments today range from 400-square-foot studios to 1,200-square-foot two bedrooms. Condos in Downtown L.A. have an average of more than 1,000-square-feet, which is more than the average two-bedroom apartment. Westwood and Beverly Hills condos average 2,000-square-feet or more with more affluent owners. Generally, condo buyers are older, less likely to move and want a two- to three-bedroom condo versus younger renters more focused on one-bedroom apartments. They don’t serve the needs of the same people.
GlobeSt.com: You have 800 units in the pipeline. Can you tell me about some of these upcoming projects?
Fifield: We recently started two more buildings in Koreatown, at 680 Berendo and 685 New Hampshire, with 347 units and at 1420 S. Figueroa with 193 units, all of which have 2015 delivery dates. Our 2014 deliveries include 1340 S Figueroa, which has 247 units, 688 Berendo, which has 130 units, and 7th and Arizona in Santa Monica, which has 107 units. All told, this amounts to 1,424 units. We hope to deliver another 800+ units in the L.A. area in 2016/17.