LA Agents Say Market’s Ready for Luxe Condo Living

The Four Seasons Private Residences in Beverly Grove offers residents an IMAX theater for private screenings, 24-hour concierge, security and, of course, life in a property bearing one of the most storied brands in hospitality.

As The Agency pumps its fists in the air after having sold out the 59-unit high-rise earlier this month, agents are pitching Los Angeles as a true contender to the vertical living of New York and Miami in a market dominated by McMansions and single-family sprawl.

The question now is if appetite can be sustained, especially as the Aman Residences in Beverly Hills looks to test demand in the ultra-luxury condominium segment when the units are completed in 2027. Apartments in that upper echelon of the condo market can sell anywhere from $3,000 to $5,000 per square foot, according to Christie’s International Real Estate Southern California’s Tomer Fridman.

The eyebrow-raising pricing comes amid shifting tastes as empty nesters downsize from larger estates or out-of-state buyers seek secondary or tertiary residences.

“It’s a really great lifestyle here and the wealthy are now starting to think about spending time in L.A. because we’re starting to get more high-end restaurants and hotels and nightlife,” said Billy Rose, vice chair and co-founder at The Agency. “It’s becoming more appealing to spend more time and have a place here, so it was incumbent on the city to gain housing that was befitting of the 1 percent.”

It took the market long enough to get here. That’s for obvious reasons, according to Rose.

Los Angeles — unlike markets such as Miami, New York, Chicago, London and Paris — is not bound by waterways. Instead, there’s room to spread out and build massive estates.

“The variety, the diversity and the quality of single-family residences here is far beyond pretty much anything else from a collective perspective,” Rose said. “So we’re kind of late to the game in terms of offering global level luxury vertical living.”

The pitch

The market’s catching on, with the average sale price of a luxury condo in the city of Los Angeles jumping 59 percent year over year in the first quarter to $5.7 million, according to a report prepared by Miller Samuel Real Estate Appraisers & Consultants for Douglas Elliman. The average price per square foot of a luxury condo also rose year-over-year by 36 percent to $1,792 per square foot.

This year’s off to a fast start.

Former OPI executive Miriam Schaeffer set the record for priciest condo sale so far this year in L.A. County when she paid $39.1 million for a penthouse unit complete with hand-painted 22-karat gold leaf on the ceiling at The Century high-rise in Century City.

LA Agents Say Market’s Ready for Luxe Condo Living — Aman Residences at One Beverly Hills (Aman)

Schaeffer was represented by Sotheby’s International Realty’s Jacob Dadon, while Douglas Elliman’s Bachir Oueida marketed the property on behalf of the seller, a limited liability company.

Some say properties like the Four Seasons, Mandarin Oriental Residences Beverly Hills, Fairmont Residences, The Pendry and the incoming Aman can push on pricing because of their names.

In other words, the brands on the buildings help woo buyers willing to pay top dollar.

“They’re commanding that price because the product is that good,” Fridman said. “It’s like, why do people pay for an Hèrmes bag? Because it’s Hèrmes.”

Fridman, who along with Compass’ Sally Forster Jones and Compass Development Marketing, represents the Rosewood Residences in Beverly Hills. Rosewood not only has its name, but a prime location.

“People want Beverly Hills. People want the address,” Fridman said.

Ultimately, it’s the total package of amenities and location that a building must pitch to prospective buyers who also have the choice of investing in a single-family home.

“It has been tricky because the products you offer someone in Los Angeles have to be so good,” said Compass Development Marketing’s Morgan Ball. “It’s very expensive to buy property. Construction costs are so high and so the product you sell someone — in their minds — has to be preferable over a single-family home, which is the same price.”

Make or break

It hasn’t been a straight shot to success for the condo market.

While the Four Seasons Private Residences is sold out, the closing of one of the last few units, the penthouse, didn’t fetch close to its original $75 million listing price. Instead, it sold for $15 million in February. Part of the steep difference is attributed to the original asking price factoring in a full buildout of the two-story home, which represented an estimated $15 million to $20 million in construction costs.

The deal suggests the market may not yet be ready for aspirational pricing, no matter the amenities or floor-to-ceiling window views.

“We’re seeing an evaluation [from buyers] in terms of the quality and the amenitization of what’s being offered,” Rose said.

Some properties have been challenged.

After an investor group led by Michael Shvo defaulted on a $200 million loan tied to some 44 units at the Mandarin Oriental Residences in Beverly Hills, the condos in addition to 6,000 square feet of ground-floor space were put up for bulk sale in September.

A spokesperson for the investor group — comprised of Shvo, Deutsche Finance and a group of German pension funds — told The Real Deal at the time the decision to market the units for sale was in a bid to “reallocate investment resources to purchase new income-producing assets in anticipation of a lower interest rate environment.”

At the time, 10 units had been sold at the 54-unit property and averaged in excess of $3,200 per square foot.

Compass Development Marketing is set to handle sales of the Mandarin Oriental condos when they come back to the market. Ball said that would occur in the next few months but declined to offer more specific timing or details on how they would be marketed.

He’s upbeat on the prospects for the property and said, “it’s our expectation that it will come back very strong.”

While competition with the market’s single-family residences is high, some out-of-area developers come into Los Angeles thinking their successes in other states will mean automatic sales locally. Understanding market dynamics can “make or break” a project, Rose said.

“Developers come to Los Angeles because there is definitely a need for this type of product on a higher level,” Rose said. “You really need to understand the zeitgeist of L.A. and the micromarkets that exist and the microlocations that exist. Building a beautiful building isn’t going to be enough. You’ve got to deliver what this locale needs.”