Prolific developer Geoff Palmer has a lot of similarly set-up fauxtalian fortresses scattered around Downtown, but the most outlandishly lavish one is a model that he's not interested in repeating. In an interview appearing in The Planning Report, Palmer gives a little peek into the barely sustainable world of his hyper-amenitized student housing complex, the Lorenzo. Located a few blocks away from USC, it's home to about 3,000 residents, but it costs a ton to maintain, what with the shuttles to campus and the internet and the security and the pilates classes and the maid service.
Palmer says the project, which he refers to as "the Taj Mahal," cost him more than $330 million to build, and five years to get approvals. The place has a half-acre soccer field, an amphitheater ("the intent was to make it look like St. Mark's Square in Venice"), "professional" basketball courts, four swimming pools, five rooftop "grilling stations," beach volleyball courts, and jogging tracks, plus "a hundred-seat movie theater ... spas, saunas, steams, yoga classes, pilates classes, dancing classes, room service from Central Kitchen, and a maid service." Those can't be cheap to maintain. There are also the shuttles—about 5,000 Lorenzo residents ride shuttles every day, Palmer says; they run every 10 minutes to the USC campus.
"It's a very expensive model, at about $21,000 a unit to manage, Palmer says. "We run it as a five-star hotel. We've got $4.5 million in payroll burden." That sounds about right when taking into account the $1.2 million spent on security, the "700-some thousand dollars" spent on those frequent shuttles, and $668,000 for internet (it's included in the rent). There's also the $50,000 that Palmer pays to be USC's "exclusive off-campus housing provider" (though the Lorenzo also houses students from Downtown's FIDM and the Loyola Law School, along with a handful of other local schools).
Meanwhile, none of the groundfloor retail spaces (27,000 square feet in total) have been rented out yet at the complex. And there are only 3,300 residents in a building that has capacity for 3,648—Palmer says he'd rather have it as full as possible than raise rents any more.
Palmer's definitely profiting off the Lorenzo, make no mistake about that. "We'll make money on the Lorenzo because we have very low debt in it. I wrote a big check to make sure of that." But, Palmer says, he wouldn't repeat the model "because it's not profitable." He says he's happy with the Lorenzo, but the return is "not what we had hoped it'd be."
· Palmer 'Re-Gentrified' Downtown LA, Despite Doubters and Design Criticism [TPR]
· Tanning Booth Helps Sell Out New USC-Adjacent Student Housing [Curbed LA]
· 7 Awful Stories About the Man Destroying Downtown LA [Curbed LA]