The collapsing downtown 'boom'

Beware of too many construction cranes, especially in a neighborhood that includes Skid Row. The Business Journal is reporting this week that developer Sonny Astani is shelving plans for a 30-story condominium tower because the market is so lousy. Actually, Astani calls it "a horrible investment." He's also thinking about killing another condo tower (a third is under construction). I believe the story is only available by subscription, which means not very many folks have access to it. Too bad. From the BJ:

High construction costs and a glut of product in the downtown market have caused developers to think twice. Between 10 and 15 proposed condo developments have been shelved or scaled back, according to real estate developers and brokers. Most loathe to admit it publicly, said Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate. "When you talk to the developers nobody wants to admit they are shelving it," Conway said. At the same time, prices are dropping for condominiums that are being rented. In August, 81 downtown rental units were listed on Westside Rentals, a popular online rental marketplace, and the asking prices were generally in the $1,900 to $2,100 per month range. In October, 145 downtown rental units were listed, with average asking prices dropping to about $1,600 to $1,800. "I think people are getting nervous," said Mark Verge, president and owner of Westside Rentals. "Owners bought this as an investment and now they have to rent their property. A lot of people thought about flipping them and now they have to rent them."

The story notes that there's still plenty of construction going on. Tom Cody, principal with South Group, says his company’s forthcoming twin-tower in downtown’s South Park neighborhood is on schedule to break ground early next year. "We see no compelling reason to alter our course," said Cody. Give it a little more time - like after Eli's Grand Avenue project collapses.