Expect More DTLA Projects from Trumark Urban
Trumark Urban is not done with the Downtown Los Angeles market. The developer is about half way through the construction of TEN50, a for-sale mixed-use condominium project, and is already looking for new development opportunities in the market, GlobeSt.com has learned exclusively. The developer is still focused on for-sale condo projects, but says that it is also looking at creative office, and notes the phenomenal fundamentals in the Downtown market that make it an attractive place to build.
“We are actively negotiating multiple large projects, and we are still focused on for-sale and mixed-use opportunities as well as creative office in Downtown Los Angeles,” Arden Hearing, managing director at Trumark Urban, tells GlobeSt.com. “We were really attracted to the market dynamics. I think it is common knowledge now that there is a renaissance of culture and lifestyle in Downtown Los Angeles. With 500,000 jobs and a great urban fabric of food and art, it has become a great place to be. At the same time, the apartment market has done a good job of pioneering in Downtown Los Angeles, and right now there are 8,000 residential units under construction, which catalyzes the pedestrian realm, street activation and quality of life, but almost known of those are for-sale condos.” Hearing said that the projects are too early to discuss details.
The developer was originally motivated to build condos when it saw the increasing rents in the downtown market with no option to buy. “We see rents being very high with people paying $5,000 per month in rent and not having any option for ownership, which is not the case in any other world city,” says Hearing. “So, there is really an imbalance of the supply and demand dynamic. For that reason, we were excited to jump on this project at TEN50 and deliver some of the first for-sale condos in almost a decade to this phenomenal submarket.”
Part of the reason that there is limited for-sale product is because lenders still prefer rental units. As a result, there is far more multifamily development than for-sale development and rents are rising dramatically. “We see the same thing in San Francisco,” says Hearing. “Because the capital markets are so attracted to multifamily as an asset class. The result is still a lack of supply on the for-sale housing side.”
Trumark is looking to change that with more condo development, but development isn’t without its challenges at this point in the cycle. Hearing, though says that the challenges are the same in every city: expensive contractors. “The biggest challenge developing in Downtown Los Angeles is just the same as in any market, and that is construction cost and labor shortages,” he says. “We try to move fast and progress design as quickly as possible and lock in pricing as quickly as possible, and work with A-plus partners on the design and contractor side. We build a great team, but we don’t always use the same team from project to project. We look for contractors who want the work and need the work, and everyone is pretty busy right now, so you need to find the right fit.”
Its TEN50 project will be the one of the first condo developments to open in Downtown Los Angeles, along with the Metropolis, and the developer already has an interest list of 1,000 people. Hearing says that they expect to be sold out within a year of opening.
Kelsi Maree Borland