Sale Comes As Other International Stakeholders Part Ways With LA Property
The owner of 1233 S. Grand Ave. in downtown Los Angeles, where a 161-unit apartment complex is proposed, wants to sell the property. (CoStar)
By Jack Witthaus
June 27, 2023 | 1:53 P.M.
A developer with most of its backers based in China is selling a property in downtown Los Angeles near Crypto.com Arena, the latest deal involving international stakeholders in a city where officials are trying to increase investment.
Iconix City LLC, an entity related to developer City Century, is selling 1233 S. Grand Ave., a parking lot that's fully entitled for a 161-unit apartment project, according to CoStar data. The project was expected to rise 21 stories and feature some ground-floor retail space.
However, the developer now is selling the property to move the proceeds into other endeavors, including its mixed-use, three-tower vertical neighborhood Olympia project at 1001 W. Olympic Blvd., said Rose O'Sullivan, senior vice president of NAI Capital, who is marketing the Grand Avenue site for sale. The project may feature buildings that rise more than 40 stories and is also located near Crypto.com Arena.
City Century is the latest investor with ties to China to sell property in downtown Los Angeles, a popular place for developers and financial backers from that country in the 2010s. In November, China-based developer Greenland USA sold its 685-unit Thea at Metropolis at 1000 W. 8th St. for $504 million, or about $735,766 per unit. That project was completed in 2020.
City Century's 1233 S. Grand Ave. site has no affordable housing requirements, O'Sullivan said. In addition, O'Sullivan said she's found loan options for future buyers of the Grand Avenue site, including a private lender that's offering a loan with 3.5% interest. That relatively low interest rate is significant as rising rates have been hampering efforts to buy and build multifamily properties across greater L.A. and nationally.
O'Sullivan said the property has attracted strong interest already from qualified buyers. The property is expected to head to an auction sale next month.
"The developer who wins this bid will be saving significant time and cost and offsetting risk compared to other unentitled sites," O'Sullivan said.
Other City Sales
Meanwhile, Chinese developer China Oceanwide is looking to part ways with nearby unfinished property Oceanwide Plaza at 1100-1198 S. Flower St. adjacent Crypto.com Arena. Outside of L.A., the developer is in the process of selling 17 acres for $134 million on the island of Oahu in Hawaii.
The sales of these residential properties come as downtown L.A. faces a weakening multifamily market due in part to an influx of new supply. More than 3,500 apartment units kicked off construction since 2021, according to CoStar data. The downtown L.A. market's apartment vacancy rate is 10.8%, double the greater L.A. average of 4.9%, according to CoStar data. The market's average asking rent is $2,758, above the greater L.A. average of $2,225.
That said, downtown apartment markets have struggled across the state and nation since the start of the pandemic. Downtown Sacramento has an 11% vacancy rate, downtown Oakland is at 9.6% and downtown San Jose has 9% vacancy, according to CoStar data. Those three markets and downtown L.A. are among the 20 markets with the highest apartment vacancy in the state of California.
"The attraction of downtown living is proximity to work," said David Evans, a multifamily investment sales associate for Kidder Matthews in greater L.A., who is not involved in the Grand Avenue site sale. "But, if people aren't going back to the office to work, conceivably there could be a higher vacancy rate for multifamily downtown."