The boom is back: LA's construction spending highest in 3 decades
Spending on new development, remodels and room additions in Los Angeles is expected to reach $7 billion by the end of the fiscal year — the highest it's been in three decades, according to the Department of Building and Safety.
"Just recently, there's been this flurry of activity," said the department's spokesperson Luke Zamperini. "This is definitely the biggest construction boom since the 80s that I've witnessed, and it's yet to be seen if it's the biggest boom in our history or not."
The rise in construction began in 2012 after several stagnant recession years, said Zamperini. It's projected to continue through 2016.
Commercial spending doubled from 2013 to 2014 — jumping from $1.47 to $3.03 billion. One big construction project that was permitted in late 2014 was at LAX. It includes renovations and a 14,000 square foot addition estimated at $2.9 million, according to the Building and Safety Department.
Zamperini said higher wages and more expensive materials are driving up valuations — but it can also be attributed to the types of buildings being constructed.
The chart below shows spending on new development in Los Angeles dating back to 2006 in billions of dollars.
There's been a flurry of high rise developments in Hollywood and downtown Los Angeles, he said. He specifically pointed to the Wilshire Grand Tower. This $1.1 billion hotel will be the tallest in L.A.’s skyline spanning 73 floors.
It will also be the first with a spire roof — a code change approved by the Los Angeles Fire Department last year.
"The Los Angeles skyscrapers up until this point have all had flat tops to accommodate helipads — so this building has got a modification from the Fire Department to configure it differently."
Brigham Yen of the blog Downtown Rising said much of this new development downtown is coming from Asian investors. He said they see the U.S. as a stable place to put their money.
"Los Angeles just so happens to be the de facto gateway city to Asia," he said.
He pointed to Wilshire Grand and Metropolis as examples.
The latter is being developed by Shanghai-based Greenland Group; it's located in downtown's South Park and will consist of three condo towers with more than 1,500 units and a 19-story hotel. In April, CurbedLA mappeddowntown Los Angeles' hotel boom. It included 28 projects.
"I think it's really going to give L.A. a much stronger urban identity. People kind of see it as more of an urban low rise city and I think adding all these high rises will do wonders for changing the identity of L.A," said Yen.