A surge of new residential developments in Koreatown will draw more Millennials to this up-and-coming LA submarket and benefit those who have already flocked there.
Currently in Koreatown, there are more than 5,000 apartment units with 200,000 square feet of retail either under construction or planned. Most of the projects are ground-up construction, while some developers are converting existing office buildings into apartments. Developers of the new projects expect a stabilized cap rate of 5.5 percent on trending rents. To achieve this, they need to get $3.50 to $4.50 per square foot for their units.
The retail components of these projects also target Millennials. Already, Yoga Works has opened on 7th Street, and Target is opening on 6th St. & Virgil Ave.
Koreatown’s explosive growth was sparked two years ago with the redevelopment of the Line Hotel, formerly a 1960s-era Hyatt. The new industrial chic hotel features several trendy bars and restaurants, and the hip nightlife brought Koreatown, previously an ethnic enclave dominated by low-rise residential buildings, to the attention of Millennials seeking an urban lifestyle with easy access to public transportation. Because of the influx of Millennials, rents in Koreatown have increased, supply is low, and demand is high.
Existing Koreatown apartment buildings will also get a boost from all the new apartment development. Owners who renovate their properties to attract Millennials can provide a much more affordable alternative to the new developments, while still achieving rents of $2.50 to $3.00 per square foot. Their tenants will benefit from the new projects as new retailers, restaurants and entertainment continues to enter the Koreatown market.
In recent weeks, per Bisnow, plans for two more high-rise developments totaling nearly 1,000 units were filed with the city.
Jamison Services, the largest property owner and developer in the Koreatown market, formally announced its intention to build 760 new apartment units and 6,400 square feet of ground-level retail in two, 23-story high-rises at 3600 Wilshire Blvd. The site is currently comprised of a parking lot and some adjacent buildings. In addition, Jamison is currently developing a mixed-use project at 3060 W. Olympic Blvd, comprising 226-units and more than 17,000 square feet of retail.
Meanwhile, CBS Properties submitted its plans to develop 3170 W. Olympic Blvd.. The mixed-use project would include 252 residential units (including 40 low-income units) and 22,280 square feet of ground floor retail. This project will replace a single-story retail strip, adding much needed amenities and density.
