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Originally Posted by zonedgreg
Like the article from City Watch says, City Century will happen. Just need interest rates to come down. There's barely any projects breaking ground right now due to high interest rates and the question of whether construction costs will continue to flatten as they have in the last few months or whether they will resume going up again.
I think construction costs will definitely continue to flatten and probably fall a bit because contractors are realizing their project pipeline is running dry 6-12 months out from now.
The name of the game for every developer is pushing through entitlements so that once interest rates and construction costs do come down, they're ready to pounce. We will likely see a big building wave in a 2-3 years as there's a ton of big projects either possessing entitlements or moving through the process now.
Also, we'll start to see some interesting, new and very large developments being planned about a year or so from now when the DTLA community plan goes into effect. Although it already passed through city council, it takes about 6-12 months for the city attorneys to make sure that all the new text and development possibilities are legal in the new code. Once that finishes, I think we'll see a lot of new development announcements.
As for Olympia specifically, again the article says it best about the hotel TOT rebate necessities. When this project was first planned, the city was in much better financial health and was handing out TOT rebates like candy to spur new development. Now the city isn't necessarily in good financial health and they're likely going to wait and see how all these office buildings start to transact for pennies on the dollar and how that lowers property tax assessments which lowers property tax revenues which lowers city's general fund.
It could be awhile before the city hands out TOT rebates again, which if that's the case, then if maybe 2 years from now when interest rates come down and construction costs come down, then maybe City Century reprograms Olympia to not have a hotel and instead does for-rent apartments or more condos instead. That change in programming would likely necessitate a minor plan check review which might take a handful of months.
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Yea, I work for a big commercial real estate firm and many projects all over the country are on "hold" or barely squeaking through for financing.
It's not a really a LA problem. It's the interest rates.
Funny enough, retail projects/malls etc are doing well or coming back from the covid disaster. Offices are in trouble all over the country, I don't care what anyone says.
i dont know what chicago and ny and dc are going to with their gazillions of sq ft of dead space. I heard like 2026-2028 those cities are going to be fucked.