[Photo by Gary Leonard, LA Downtown News]
One tipster in the real estate world writes in with his take on the collapse of the Axis condo project near Union Station. You know the one - where buyers expecting to move in this summer all received offers to pull out and get a full refund on their down payment. Yeah, that one. The "official" line from developer Standard Pacific: Oops, we couldn't get title. Our tipsters take:
I'm not buying the story regarding Standard Pacific's pulling of the Axis at Union deal. Title issues? A public company doesn't build at multi-million dollar building without making sure they have good title. The banks wouldn't let them. This smells like slow sales. They have only sold 40 units and have been marketing for some time now. I think shareholders were viewing this deal negatively. I think SP is going to flip this to a multifamily operator and try to mitigate their losses. I don't think this portends well for the downtown condo market. Granted, this is an inferior location compared to South Park or even the Artist's District. Here's what's happening I think: buyers are snapping up the $300 - $500k price point units because of the relative value play on the rent vs. buy decision. The higher priced units are not moving because of the shallow demand at those price points. The problem is that all the new stuff being built downtown is focusing on the higher-end market and priced too high in the $600-$800 psf range. I just don't think you are going to get Westside prices for downtown units - there needs to be a relative value spread. At least until downtown gets some more amenities (retail, parks, etc.) which is five years away. I believe we're in for a correction in the downtown condo market and we're going to see more condo deals going rental. This is not all bad, as a healthier long-term downtown is one that grows organically with a good mix of product from affordable to the high end. Just my two cents.
Sounds like a more plausible explanation than we've heard so far. And just in case you're wondering - Yes, they did update their website.
·More Downtown Development News of Note [Previously on Curbed LA]