Hanover Moving Up on a Sunday
Eric Richardson
[Flickr]
DOWNTOWN LOS ANGELES — Buried in all the stories right now that are trying to turn a few scattered data points into a Downtown "collapse" is the obvious fact that we've got a lot of great projects under construction right now. Every few weeks I have to hop on my bike and take a spin around Downtown checking up on the ones I don't pass by every day.
Yesterday that ride took me to South Park, where I was impressed to see a crew getting a little Sunday work in on the Hanover tower at Figueroa and Olympic. It appeared that they were about to lift a new segment of the construction crane, readying for the building to rise up another level.
Every time I see Hanover it amazes me how fast they're building. Just back in August I was commenting on their parking pedestal's height. Now the structure has a good six or eight normal floors.
David Kennedy on December 04, 2006, at 11:20AM – #1
Could you summarize those data points for those of us who don't have access to the Business Journal article on their website? Thanks.
This "the sky is falling" narrative is indicative of lazy reporting. Predicting catastrophe is not good reporting. The operative word here being reporting. I've become quite used to filtering through this kind of writing. Yeah, I know the reporter is under pressure to file a story. However, I notice that far too often reporters come to a story with an established narrative. They know the story they are going to tell. They look for facts to support the story they've got in their head and voila! -- the apocolyse is nigh.
Frankly, it would be far more interesting to read an accurate summary of downtown development. Clearly, so much is going on. For readers who don't live here, that would be an interesting story, particularly in the context of the entire region. Yes, we're all aware the residential real estate market has topped out. But, what does it mean in terms of downtown development?
You'd think the readers of the Business Journal would place a premium on quality reporting. I'd also think the editors would rein in this kind of wild-eyed and breathless reportage. Then again, maybe not. Media types always seem befuddled by the low regard which they are held. This kind of reportage is a further example of why.
Eric Richardson (@blogdowntown) on December 04, 2006, at 11:36AM – #2
Basic gist: Astani is putting a hold on one of the towers and Concerto because construction costs are getting too close to sale prices for the numbers to pencil out. He's also wary about costs on his 8th/Grand project, and has thought about scaling it back. There's also the ominous:
Buried in the story are South Group saying that they see no reason to change any of their plans and Astani having reserved 100 units in Vero (west of the 110) in a weekend.
Reactions have all been to take the sky falling angle:
Bottom line in my opinion: Good projects will pencil out, bad projects won't. If you build a good project and sell it for anything reasonable (even $600 - $700 / sq. ft.) you'll sell it out.
kenarch on December 04, 2006, at 12:21PM – #3
Speculators beware!!! LOL... There are plenty of investors and/or developers that charge into something fur that "sure money" or "fast buck"... and real estate tends to attract more of that than just about anything else. THe residential real estate market may have "topped out", maybe it has simply "leveled off", or perhaps it will even "decline". A "collapse"??? Well, if we get back to the way it was in the late 1970s (and I hope we don't) - with 18% interest rates, high unemployment, people being financially immobilized, AND add today's very unstable variable rate loan and "creative financing" climate to that, plus have a dead stop in people moving into the LA region, THEN I'll believe we're in a "collapse". Has that happened before? Sure. Take a look at Rust Belt cities like Buffalo, Cleveland and Detroit. LA is far from that sort of place.
I agree, David... "the media" gets very lazy - or worse, pushes an agenda that becomes so transparent that they push themselves to the point of irrelevance. I watched "them" talk down the economic growth cycle in the mid '90s, then gleefully jump on the Iraq war bandwagon (geez - a real war... think of all the "reporting" we can do... hey - we can even "embed" a few reporters!!! Wowwey!!!). Now, in a time when the cost of capital is still at a very favorable level for development and LA County is still growing by an average of 60,000 people every single year - (think about that - most states don't grow that much)well, "the media" has to scare people somehow!!! Construction costs are the current bugaboo. Yes, construction costs are very much higher than they were five years ago... but - real estate sale prices have generally doubled in that same period - in some areas, tripled or more. Construction suppliers, contractors, etc will take their opportunity as surely as will sellers. 25% per year increases are unsustainable. They also hurt people trying to get into housing - rental or owned. The market has been unrealistically pumped up.
I see a continued superheated price run-up as a very unlikely thing, and I also believe it would be bad for far more people than it would be good for. Hey - Rome (and LA) wasn't built in a day. Downtown won't be either - and yes, those projects that are solid will be completed. Yes, it can be scary to read all the endless "apocalyptic reporting". We live in a time and place where objective, serious, intelligent reporting is forced to the margins of the vast media onslaught we all deal with every day.
David Kennedy on December 04, 2006, at 12:50PM – #4
I goofed. It is easy to register at the Business Journal and read the article itself. I incorrectly thought you had to be a paid subscriber.
D'oh!