DTLA Condos and Apartments Target Similar Buyers

Metropolis Tower II condo units have officially hit the market. The second tower, which has a high-end amenity deck and a full suite of onsite services, is expected to sell quickly—and it is no surprise. Not only has the Metropolis project has been successful, but there has been tremendous demand for condo product in Downtown Los Angeles in general. According to Mike Leipart, managing partner at the Agency Development Group who is leading the marketing efforts at Metropolis, the popularity of the residential spaces, both for-rent and for-sale, are an effect of the explosion of activity in Downtown Los Angeles. He says that people want to live Downtown, whether they are buyers, renters or both. We sat down with Leipart to talk about the condo sales activity in Downtown Los Angeles and why demand is growing.

GlobeSt.com: You sold the Ritz Carlton condos in 2011 and 2012. How has the condo market evolved since then?

Mike Leipart: I consider that the starting point. Prior to that, you were seeing some condominiums built into a bad market and they ended up becoming apartments or some sold at a $500 per square foot price point. Then the Ritz came and it was double the underlying market. We were selling those condos for $900 per square foot. To me, Metropolis is just the next evolution. The amenity deck on Tower II is the latest and greatest amenity deck. The properties are evolving to the degree that the market can support them. As people on a net basis continue to move to L.A., Downtown L.A. has become the best place to capture them because it is the one major area of Los Angeles proper that has the density. All of the things that make an urban center and urban center—DTLA is it. We have other areas that have a block of that, and if you live close, you can have that lifestyle. However, you don’t need a car in Downtown L.A. and that appeals not only to people that don’t have a car but to people could afford a very, very nice car.

GlobeSt.com: What is demand for condos in DTLA like today?

Leipart: It is much more competitive marketplace now, not because there are so many more condo buildings but because at the time that these apartment buildings were being built, we have seen some of the nicest most amenity-rich apartment buildings some to market. It used to be a forgone conclusion that if you could afford to buy real estate, of course you would. Now, we see a new trend in consumer behavior that if they can get the quality that they want, they might rent instead. In fact, millennials are more likely to buy a second home than they are to buy their first. They will rent in the city and have a small place in the country that they own. You really have to have a compelling argument on the for-sale side, or you are going to skew a little older in the demographic. You are seeing the entire downtown area explode, but only some of that is for-sale, and that is actually really healthy.

GlobeSt.com: Is there are overlap in the buyer and renter pools for luxury housing in DTLA?

Leipart: Absolutely, and that is true everywhere. If you move from New York City to Beverly Hills, you will look at houses to buy and houses to rent. Luxury leases is here to stay. You can rent something as nice as anything that you can buy. It is a different economy.

GlobeSt.com: Why has Downtown Los Angeles become such a hotspot for condo activity?

Leipart: Downtown Los Angeles is built to be the receptor of all of the people now choosing to live in Los Angeles, and it is a significant number. We are net-net getting a lot of people. The people that want walkability, great restaurants, great art a great sense of civic pride are choosing downtown. A lot of people today would rather have that any way than Beverly Hills, regardless of their money. They are picking downtown because they are picking downtown, but they could live anywhere. Downtown has taken off, but the truth is that it is still adolescent in the stage that it is at. It is not mature. It is going to keep getting denser, bigger and the quality of life is going to continue to grow.