DOWNTOWN LOS ANGELES - When sales of the condominiums at the Barker Block began early this year, real estate watchers were paying close attention. The 68 units in the Arts District were the first new for-sale residences in Downtown to hit the market in more than a year.
The questions were simple: Would people actually buy a home in post-recession Downtown? If so, how much were they willing to spend?
Now, the answers are pretty clear: The appetite to buy is voracious, and although prices may not have eclipsed the $600 per square foot that they reached before the economy tanked in 2008, they have gotten pretty close.
Sixty-six of the 68 units in the Arts District complex have sold. With many buyers paying more than the asking price, and with a few bidding wars, real estate experts expect the interest in owning in the Central City to remain high.
“You no longer have to sell Downtown as a terrific place to live,” said Alan Mark, president and founding partner of the Mark Company, a real estate, marketing and sales firm based in San Francisco that tracks condominium sales.
The Barker Block sales were spurred not just by the scarcity of Downtown condos, Mark said, but also by the renaissance of the area, with stores, restaurants and other businesses opening. He also pointed to the walkability of the community and the access to public transportation.
The first phase of the Barker Block, developed by the Kor Group with 242 condos, opened in 2006. Then the recession hit, scuttling plans for the next phase.
It took until spring 2013 for the project to move forward again. That’s when CityView, a development firm run by former U.S. Housing and Urban Development Secretary Henry Cisneros, teamed with investment firm Blackstone on the second phase. The $25 million project (with marketing help from the Kor Group) included units ranging from approximately 675-2,000 square feet.
The highest asking price in the bunch was a two-story residence listed at $739,000. Multiple offers pushed the sale price north of $1 million, said Con Howe, managing director of CityView.
The average price has shifted over the course of the sales, said Howe, and at one point reached $600 per square foot. Howe believes that by the time the final two units are sold, the average will level out to $575 per square foot.
“As we got closer and closer to opening, the more and more optimistic we got. This has exceeded our optimism,” he said.
The two remaining condos are both open-space units with one bathroom. A 1,070-square-foot residence on the third floor, which served as a model unit, is listed at $614,000. A 907-square-foot condo on the second floor is priced at $585,000.
Cheaper Than Silver Lake
To Richard Green, the director of USC’s Lusk Center for Real Estate, Downtown in 2014 is like the Westside of 2007: The area is desirable partly because of a lack of affordable housing in surrounding neighborhoods. Plus, he added, there are enough amenities that allow people to live in Downtown without feeling like they are giving something up.
Another Downtown strength, he said, is that it’s cheaper than nearby neighborhoods that are even more desirable. In Silver Lake, he noted, houses sell for $600-$700 per square foot. In that regard, $575 looks like a good deal, he said.
The second phase of the Barker Block measures 72,451 square feet. The condos are in the red brick Barker Brothers furniture factory and warehouse, which dates to the early 1900s. The developers utilized original brick and timber beams in the conversion. The residents will have access to the connected Barker building (phase one) which includes a fitness room and a rooftop pool.
The project is just around the corner from Urth Caffe and joins a neighborhood that is surging. Other recent additions include Zinc Café, Blacktop Coffee, eyewear retailer Warby Parker and the restaurant Fifty Seven.
Mark said he expects the appetite for Downtown condos to remain high. He noted that in addition to the limited stock and high prices in Silver Lake, sales figures are also rocketing up in neighborhoods such as Echo Park, Los Feliz and Highland Park.
The Barker Block isn’t the only Downtown condo complex to draw such high interest. In the spring, Anschutz Entertainment Group announced that all 224 of the Ritz-Carlton Residences had been sold. Units there ranged from $1 million to $10 million.
While the desire to own a Downtown home is clearly high, more stock is finally in the pipeline. Greenland Group last month broke ground on a 38-story condominium building north of L.A. Live. At 12th and Olive streets, Mack Urban is embarking on plans for two seven-story for-sale buildings.
© Los Angeles Downtown News 2014
