The Downtown Los Angeles condo market experienced a jump in the second quarter. During the quarter, condo sales increasing 381% year-over-year and pricing increasing 23%, according to the most recent DCBID report. There were 423 condo sales with an average sale price of $828 per square foot.
Carol Schatz, president and CEO of the Downtown Central Business Improvement District, isn't surprised that the condo product has been absorbed so quickly and there has been an increase in pricing. “People are realizing that there are huge changes taking place in Downtown Los Angeles, and that all began with residential,” she tells GlobeSt.com. “Residential is still the biggest market segment of growth that we see. We have seen increases in rental rates and a lowering of the vacancy rates.”
In addition to the condo activity, apartment activity has remained strong. In the second quarter occupancy rates were stable, remaining at 86.3% year-over-year with rents up 5% to $2.92 per square foot and effective rents up 3.5% to $2,545. This activity makes the residential market—both for-sale and rental product—the most active sector in the Downtown market.
The condo sales were largely driven buy new apartment openings at TEN50 and Metropolis. Additionally, more than 1,000 new condo units were delivered during the quarter Atelier, G12, and WREN communities. “If they aren't already gone, we are going to see in a very short order that most of the parking lots are going to be gone soon,” says Schatz, adding that she expects more construction in Downtown Los Angeles as demand for for-sale housing increases.
Aside from residential, the retail market is the next sector showing tremendous growth and strength. In the quarter, Jordan Brand and Vans announced new DTLA brick-and-mortar locations in addition to 134,390 square feet of net absorption. “We are seeing increases in retail, which had been dormant for a number of years,” says Schatz. However, rental rates fell to $2.51, a year-over-year decrease of 1.18%. The hotel and office markets are both slowly growing, and with Warner Music moving in later this year, there is still hope for a boost in office activity.
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