Will New Deliveries Impede Luxury Demand in DTLA?

This year, several thousand new apartment units will deliver into the Downtown Los Angeles market—but the strong demand is expected to offset the new supply. CIRCA, a $500 million 648-unit apartment complex hailed as “ultra-luxury,” will deliver in September, but developer Hankey Investment Co. isn’t concerned about the supply, both because of the strong demand and the quality of the product. Hankey opened the leasing office this month for CIRCA and has already received strong demand. We sat down with Scott Dobbins, president of Hankey Investment Co., to talk about the project and the luxury demand in Downtown Los Angeles.

GlobeSt.com: What is apartment demand like in DTLA for luxury rentals?

Scott Dobbins: Most of the recent towers in Downtown Los Angeles have touted themselves as luxury, and most of those units are full. Downtown’s luxury apartments have been an alternative to the Westside, and Downtown’s luxury prices are more affordable than Beverly Hills and some Westside locations. Now, with L.A. Live, the excitement on the Broadway and Spring Street corridors and access to Bunker Hill and the Arts District, Downtown L.A. has become an alternative for those seeking a vibrant place to live on a full-time basis.

GlobeSt.com: What has the response been like to CIRCA?

Dobbins: It has been fantastic. Our front row seat in front of L.A. Live and Staples Center has been a draw, as well as our two-acre amenity deck – which hovers 100 feet above street level. Our grand opening is scheduled for September of this year, and the excitement is building. We just officially opened our leasing office at 1201 S. Grand Street, which includes a sneak preview of the interior of one of the apartment homes of Circa. We only started leasing a week ago, and are literally booking leases daily. We are very happy with the reception so far.

GlobeSt.com: This year, we will see several thousand units come online in DTLA. Is there any concern about how this might impact CIRCA?

Dobbins: That is probably true. Several deliveries of units can do that in Downtown Los Angeles, because it isn’t a very big market. It is a fraction of the size of a Beverly Hills or a Westside. That is an opportunity to keep growing in Downtown. That is also why it can come back up so easily. There is a lot of opportunity to grow, and with the amenity base that has been built downtown, it is going to continue to grow and become its own market. On a micro level, I am not concerned. There is only one other tower opening up this summer, and another in the near future. Circa is going to be the top end of the market, and the level of quality for its rental homes and its location will truly set it apart from any of the competition, so we’re very comfortable that our product will be well received by the market.

GlobeSt.com: What is your leasing strategy to attract renters?

Dobbins: Our leasing office has let people touch and feel what they can’t see right now. We are only months away from when they might be able to see that. Social media and the website are both a large part of what we are doing, and that is important to the millennial demographic that will likely be renters. For a lot of today’s renters, social media and the website are prime outlets for them to hear about our product. This is key. We think Circa sells itself and want to just inform the smart renters to help them make a lifestyle choice like Circa.

GlobeSt.com: Overall, what is your outlook for apartment activity in DTLA?

Dobbins: DTLA has always been a great place for jobs; however, in the past five years, a series of neighborhoods has evolved, like Broadway, The Arts District, L.A. Live, South Park, and many others. In truth, I see Downtown L.A. becoming similar to San Francisco and New York, with each neighborhood developing its own personality. Now, with shopping, nightlife and other draws, it is naturally that DTLA will be a living destination like other 24/7 destination. DTLA will continue to grow, and Circa is one of the drivers of that growth, given its size and scope, as well as its location. And no doubt, its personality will shape part of the future of DTLA.