A residential skyscraper has been approved for construction in the South Park neighborhood of downtown Los Angeles, though it’s unclear how soon construction will begin.
The City Council last week signed off on a proposed 51-story apartment tower at 11th and Olive streets, a few blocks east of Crypto.com Arena and the L.A. Live entertainment district.
New York developer Mack Real Estate Development declined to talk about the planned tower, but documents filed with the city show a tall tower with 536 rental units and ground floor spaces for bars, restaurants and other retail uses. It would have parking for 581 vehicles both underground and above ground.
The site at 1105 S. Olive St. is now a surface parking lot.
When asked when construction of the project might begin, a representative for Mack Real Estate said the company had no comment.
Even though demand for housing is high in Los Angeles, it’s challenging to construct ground-up multi-unit housing in the current financial climate, urban development consultant Hamid Behdad said.
Costs have risen and grown more unpredictable on multiple fronts, Behdad said, raising uncertainty for developers about whether they will be able to rent or sell new units profitably after completing them.
Top hurdles include high interest rates for borrowing money to finance construction. New tariffs are driving up the cost of imported construction materials while raising uncertainty about how long the tariffs may last or what new ones may arise.
Labor costs have also been increasing in recent years, Behdad said, and the recent Immigration and Customs Enforcement raids have added a destabilizing effect on the construction labor pool.
Some developers who have downtown projects approved but not built are trying to sell them to other developers or investors, he said.
“Nothing is easy,” Behdad said.
South Park, though, is one of downtown’s most vibrant neighborhoods where thousands of new residences have been built in recent years, said Nick Griffin, executive director of the privately funded Downtown Center Business Improvement District, a nonprofit coalition of more than 2,000 property owners.
There is “a demonstrable underlying demand for housing more across the city and region, but specifically in downtown with the occupancy rate at a pretty steady 90% or so,” he said.
The location of Mack Real Estate’s planned project has already proved desirable to developers, Griffin said.
“There have already been several significant projects built along that stretch and there are another four large-scale projects within a couple of blocks, so you’re you’re talking about a significant residential hub” that stands to attract new residents and more development, he said.
Griffin said he hopes developers like Mack Real Estate are getting their projects ready for market conditions to change in the next six months to two years.
“Financial conditions are going to align themselves at some point in the not too distant future,” he said, “and they want to have their projects teed up and ready to go.”
