December 3, 2015
Los Angeles’ Westside has long been considered one of the most desirable places to live in the state, if not the world. That’s far from changing anytime soon, according to a panel discussion at the Connect Westside Los Angeles conference held on December 2 at the The Beverly Hilton.
The discussion, moderated by Laurie Lustig-Bower, a CBRE executive vice president specializing in multifamily and capital markets, focused on some key developments and trends that bring condos and apartments together with other property types, especially “residentiality” or the combination of residential and hospitality assets.
An example is One Beverly Hills, at 9900 Wilshire Blvd., being developed by the China-based Wanda Group, which is expanding its hotel holdings internationally after already building dozens of hotels in its home country. Formerly a Robinson’s-May department store, it is now being converted into two buildings with 193 condos and a 143-room hotel. Additional amenities for both owners and guests include a rooftop pool, restaurant, bar, spa and gym. One Beverly Hills was originally just planned for condos.
“We feel that One Beverly Hills stands apart from anything that’s on the market today,” stressed Rohan a’Beckett, a Wanda deputy general manager, explaining that condo owners will have the same experience that one has at a luxury hotel.
The Athens Group is doing the same thing with its Fairmont Santa Monica hotel, adding a condo component to the existing property. The company is lowering the hotel’s room count from 302 to 280, making more room for suites, and adding 60 to 100 condos as well.
“By adding a residential component, you’re going to drive significant value appreciation,” stressed Jay Newman, Athens’ chief operating officer. “It’s a great monetization event.” The sales of the condos can help pay off debt and equity loans on the hotel portion, which can usually take three-to-five years to stabilize, he noted.
Tenants attracted to these types of luxury condo-hotel marriages are usually empty nesters looking to downsize, as well as millennials, who like being close to the restaurants, bars and other luxury hotel features to which condo residents have access.
“You have to be full service to really get the premium,” Newman explained. “You don’t get the same premium if you’re attached to a Westin.”
Eric Olsen, a principal at TCA Architects, agreed that Millennials are looking for luxury and amenities they can get in a hotel environment, even when renting apartments. “They want it all,” he pointed out, saying that this generation wants to “feel like you’re in a hotel lobby rather than a leasing office.” They’re also attracted to properties that blend in organically with the culture of the surrounding neighborhood, as well as being near public transportation.
On a similar note of what it takes to attract tenants, Senior Managing Director Gregory Campbell of TruAmerica shared the company strategy of buying class-B apartment complexes and converting them into class-A properties. Campbell expects rents on the Westside to increase three percent to five percent over the next few years. To push that, landlords need to make their properties more attractive. “More rent means expecting more services,” Campbell said.
As culture and technology progress, it is becoming increasingly important for landlords, developers, and architects to design and provide full-service amenities for their tenants.