The city apartment complex in Hollywood ended almost a decade ago. New construction has fallen. (Myung J. Chun / Los Angeles Times)
Los Angeles creator Cliff Goldstein has just completed the plush new WestSide apartment complex, but this is the last one he intends to create in the near future.
Although the demand for housing in the region is red hot, many people who live for a living have paused shovels to the ground because they say it is just too difficult to make profits.
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“It’s a needle in a haystack to find an opportunity to create a financial to create today,” Goldstein said.
Ari Kahan had previously had several projects where 800 units were built at any time in Los Angeles. No more, he says.
“We didn’t buy a site to create it for more than two years,” he said. “I don’t know when we will build in Los Angeles.”
Despite the reliable demand, the supply of fresh rental units that make up most of the new dwellings in Los Angeles. The vacancy rate is one of the lowest in the country and the lease percentage is one of the highest in the country.
However, since the beginning of last year, the number of new units under construction in Los Angeles has been declining and intends to dive into the lowest lower limit for more than 10 years, the real estate data provider Costar says.
Less than 19,000 apartments were built in three months before September. According to Costar’s Count, it is 30% less than three years earlier.
The developers say they can’t raise money they need to create as much as possible their biggest sponsors as possible, that pension funds, insurance companies and other institutions looking for long-term investments do not want to build their money in LA because due to fast-changing rules, it is impossible to make profits.
The year from the Covid-19 has shown how fascinated industrial regulation can get LA, says observers, so investors are taking money to other cities.
“The LA red majority investment community,” said Kahan, Director of Landmark Group in California.
If investors do not invest, builders cannot build.
“The creator without investors was like a king without clothes,” Goldstein said. “I am an optimistic creator who wants to improve, but the investment community will not participate.”
The latest Washington policy has not helped either. Higher rates have caused rising prices for building materials and equipment, and dealing with non -document employees decreased and caused most of the international labor on which the industry depends.
“In some categories most affected by rates, prices have risen extremely rapidly,” including iron and steel prices, which have risen 9%over the past year, and copper wire and cable prices that jumped 14%, said Anirban Basu, chief economist at the trade group and contractors.
The California construction industry depends on immigrant workers. Approximately 61% of state builders are immigrants, and 26% of them do not have documentation documents, according to the Bay Area Council Institute of Economics in June.
“In the past, it was difficult to find construction workforce, and now it’s even harder,” said economist Richard Green.
Green, who is the director of the USC LUSK Real Estate Center, said the conclusions of the new USC project, which collect housing data in the Los Angeles district neighborhood, illustrate the problem.
Overland & Ayres apartments, recently completed by GPI COS, at the site of the former shopping center in the West of Los Angeles. (Juliana Yamada / Los Angeles Times)
Housing production in the Los Angeles County has slowed down severely over several decades, decreasing from more than 70,000 new units from more than 70,000 new units in the 1960s to about 30,000 in the 1970s and 1980s to less than 15,000 in 2010. As a result of this long -term housing, the region has left older, more stressful housing reserves and a deep shortage of accessible opportunities, USC said.
Many new dwellings are a small city land with units of one family, with most new dwellings being rented apartments. About 152,000 new units have been built in Los Angeles County in the last six years. The vast majority of them were rented units, and only 10% were accessible to household farms.
According to Homeabroad, which helps foreign investors to buy US real estate, southern California is distinguished even among the sharp nationwide.
In July The number of apartment building permits issued in the Los Angeles longtime beach-Anaheim Metropolis district decreased by 68% to 556 in July compared to the same 2020. Monthly, said at Homeabroad. It was the second largest fall in the country after the Silicon Valley District San Channyvale-Santa Clara.
Investors ‘concerns include public policy such as United “for Los Angeles’ transfer fee for high real estate sales, as well as temporary boundaries for tenants who were adopted during pandemic.
“They are afraid of what policy can fall later,” said Goldstein, founder of GPI COS.
On Tuesday, two members of the Los Angeles City Council made an offer to investigate the minimum wage of $ 32.35 per hour in a city with 10 or more residential units of less than 85 feet, 10 or more. The study will also investigate an additional health care credit – $ 7.65 per hour of builders.
Of course, tenants are also difficult for the price of apartments in Los Angeles. At the current cost of construction, the developers must take between $ 4,000 and $ 5,000 a month, depending on the amount of the apartment, indicating that the tenant should earn between $ 120,000 and $ 150,000 a year.
Creators predict that people will have to move on and the entry time will grow.
However, some are looking for offers to be ready to create when the environment is better.
“Competition is much lower, and some real estate types have fundamentally reduced,” said Jordan Lang, president of McCourt Partners. “We look at it as time to buy a few land sites to be ready for this other cycle.”
Culver City McCourt Partners recently joined Lincoln Property Co. to take over and redesign the offered apartment complex on the Jefferson Boulevard. The Lang hopes to start working on the project next year until the return of institutional investors is returned.
“We hope the capital will return to the market” in six months or three years, he said. “We want to be prepared with a project that can put shovels in the ground when it happens.”
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This story initially appeared at the Los Angeles Times.
