In January, work stopped on the $1 billion Oceanwide Plaza project next to L.A. Live and the Los Angeles Convention Center. Developer Oceanwide Holdings announced in late January that it had put the project on hold while it restructured its capital, but pledged to resume construction by the end of the following month.
February has come and gone, as have March and April. Meanwhile, little apparent progress has been made. Although construction fencing remains up and cranes still rise above the frames of the three towers, on most days there appear to be few if any construction workers on site.
The project at 1101 S. Flower St. is slated to comprise 504 condominiums and a 154-room Park Hyatt hotel in two 40-story towers and a 49-floor high rise. Last week, a spokesperson for the project declined to comment and instead pointed to the developer’s statement in January.
“Our decision to provisionally pause construction is solely based on these internal factors and nothing else,” the Jan. 24 statement said. “With more than $1 billion of equity already invested in Oceanwide Plaza, we look forward to investing more capital into the property and together, with [contractor] Lendlease, remain committed to building this landmark project for L.A.”
The main issue behind the stall still appears to be the Chinese government’s capital control measures on direct international investment, according to Dr. William Yu, an economist with the UCLA Anderson School of Management and an expert on the Chinese economy. He said that over the last three years, Beijing has been exerting greater scrutiny and restrictions on overseas investment in areas such as real estate, following a near depletion of the country’s foreign currency reserves.
Dale Goldsmith, a partner with the land-use firm Armbruster, Goldsmith & Delvac and a veteran on the development process in Downtown, said that despite the project sitting unfinished in the heart of South Park, Oceanwide Plaza’s problems are not a sign of the overall development market in Downtown slowing down.
“I wouldn’t say this is a Chicken Little moment where the sky is falling. It’s a complex project. I imagine sorting out new financing is very complex,” Goldsmith said. “It’s a lot easier when you haven’t broken ground. Obviously there’s the established quality of work, contractors and mechanical liens already set up.”
At the end of January, contractor Webcor Construction filed a $52.8 lawsuit against Oceanwide, Lendlease and others, citing breach of contract and unpaid funds. That lawsuit is still pending. Oceanwide did not comment on the matter.
Yu also said that the ongoing trade dispute between the United States and China is causing worry among Chinese investors, who are concerned that a further breakdown of relations will adversely affect the economies of both countries. Trade talks failed to produce a deal before higher tariffs went into effect earlier this month. Yu said that could cause further delays to projects such as Oceanwide Plaza that need financing.
In January, Oceanwide Holdings stated that it expected the development to be completed in 2020.