Metropolis Drives DTLA Condo Pricing Way Up

LOS ANGELES—The opening of the Metropolis tower II has pushed condo pricing up 15% in a single month. According to the Mark Co. report, condo prices in Downtown Los Angeles climbed to $803 per square foot in the month of October following the opening of the $1 billion Metropolis development. This is the first time that condo prices in Downtown Los Angeles have exceeded $800 per square foot.

"Metropolis is important because it is the first new condominium tower in Downtown Los Angeles during this business cycle, and it is also the first Downtown Los Angeles condominium tower developed by a Chinese developer," Erin Kennelly, senior director of research at the Mark Co., tells GlobeSt.com. "Based on the current development pipeline, Chinese developers will play a large role in shaping the future of Downtown L.A." The Metropolis units sell for $500,000 to $2.2 million.

The opening of the development increased new construction inventory by 402% over the previous month and nearly 100% year over year. Including the new units released by Metropolis, there are 622 new condo units available for sale in the downtown market. This is a big turnaround, considering that pricing fell 2% in September to $760 per square foot, and while the market was up on an annual basis, it was starting to show some volatility.

Metropolis is the first of a handful of condo developments to open, so it will be interesting to see if pricing still soars or if it stabilizes. "As more units come online and eventually close escrow, their sale prices will become public record. These prices will bring up the average price in Downtown Los Angeles," explains Kennelly. "Furthermore, the increased density of Downtown Los Angeles will create an more vibrant neighborhood."

However, it wasn't all good news for condo pricing. Prices in the resale condo market fell by 7%, following a 4% decline last month. In October, the average price of a resale development was $560 per square foot, and there were only 99 available units on the market, leaving only a 2.7-month inventory. Pricing year over year is still up 11%.