Apartment development has skyrocketed in Los Angeles over the last few years, but rising prices and increasing development regulations have left some developers wondering where to go. Century West Partners told us earlier that they will likely start looking to develop in more outlying or suburban markets that are outside the jurisdiction of Measure JJJ, and they expect others will follow. Genton Property Group, on the other hand, is looking for markets where they can create density and middle-market housing.

“We are looking at the logical markets where you can still get density and build density,” Jonathan Genton, founding partner and CEO of Genton Property Group, tells GlobeSt.com. “Downtown Los Angeles is a good example, and it is being saturated with a lot of apartments. Rental rates continue to climb and probably will continue because the demand characteristics of 40,000 or 50,000 units that are under supplied annually. That is going to chase rents up naturally.”

While Downtown Los Angeles is a good example of creating density and scale, Genton says that the market prices have surpassed the ability to create middle-market housing, which is where he sees the highest demand going forward. “I think about per square foot numbers,” says Genton. “At the high end in Downtown Los Angeles, you are in the $1,200 per square foot kind of range. So, a 1,000-square-foot apartment is $1.2 million. A lot of people are chasing that customer. I am looking to get something $800 to $600 per square foot kind of numbers. A few years ago, that was considered a high price point in L.A.”

Overall, Genton will be focused on the markets where he can build middle-market housing. Because for-sale product is so scarce, rental housing will continue to be in high demand for all price ranges. “People are being disenfranchised from the ability to buy a condo or buy a house, and since a condo is a more difficult execution and is more difficult to finance, there is going to be a supply constrain on that side of the market,” says Genton. “To the extent that we are able to solve a portion of that, we think the demand for market-rate or market housing in a condominium of some density is a very deep market.”

Instant Insights /

Where Developers Are Looking to Build in L.A.

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