Owners of an upscale apartment complex across the street from the popular Grove shopping center in Los Angeles are spending a fortune to make some of their best units even more luxurious — and more expensive to rent.
In a handful of pricey neighborhoods across the city, some apartments are beginning to resemble a cross between a $1-million home and a five-star resort. The movement is turning on its head the long-held assumption that wealthy Los Angelenos buy, not rent, their residences.
Across 3rd Street from the swanky Grove outdoor mall, for instance, landlord Aimco is sinking $15.7 million into transforming 115 units of its sprawling Palazzo apartment complex in the Fairfax district into a special enclave called the Penthouses at Palazzo.
The upgraded apartments have touches found in expensive homes such as premium hardwood flooring, high-end appliances and shower stalls big enough for two with side-by-side rain shower heads. Monthly rents clock in at nearly $5,000 for a one-bedroom unit and more than $7,600 for a spacious three-bedroom pad.
Residents share an exclusive rooftop social deck with cabanas and have access to a new gym and a spa that sells massages, facials and other beauty treatments typically offered at chic resorts.
Such over-the-top apartments are a small but growing niche in Los Angeles. As recently as five years ago, developers calculated that rents could only go so high before affluent people would opt out and go buy a house instead, real estate broker Mauricio Umansky said. His firm, the Agency, markets the Penthouses at Palazzo.
“Back in the day, you expected a prefab shower and bathtub,” Umansky said. “Otherwise you owned something.”
Aimco is tapping a trend among L.A.-area developers to create ritzy accommodations for a prosperous few who happen to prefer renting to owning. Others testing the top end of ultra-deluxe apartments include shopping center magnate Rick Caruso and CIM Group, one of Los Angeles County’s largest retail and residential landlords.
Demand for top-drawer rentals is limited but growing, said Shaul Kuba, a principal at CIM Group.
“For the most part, people are looking for affordability when they rent,” he said, “but there are some people who are interested in experiencing that type of living without a long-term commitment.”
That type of living may include such touches as the maple cabinets, Sub-Zero brand refrigerators and six-burner Wolf stoves CIM installed in its Catania apartments at the edge of Old Pasadena, where rents hit $8,000 a month. Luxury takes many forms, Kuba said.
“It’s the concierge, the full-time security,” he said. “And it’s not having to park in a ‘compact’ space in a giant parking lot. It’s all the things you can think of.”
CIM is planning more ultra-lux apartments in Hollywood, West Hollywood and downtown Los Angeles, all neighborhoods that have shopping, dining and other attractions within walking distance.
Developer Caruso, who has regretted that he left apartments out of the mix when he built the Grove shopping center in 2002, decided to make housing a big part of his next mall. The Americana at Brand, completed in 2008 in downtown Glendale, included hundreds of apartments and condos rising over shops and restaurants.
The 242 upscale rental units have been consistently occupied, Caruso said, so he decided to dial up the deluxe in the Marc Building, the mall’s most central apartment structure. Caruso plans to upgrade the 96-unit complex when apartments turn over. Improvements may include Wolf appliances, marble surfaces and other fancy touches.
“We’re taking them up two or three notches,” he said.
Super-deluxe apartments have a colorful history in Los Angeles. Wealthy movie stars were among the tenants of elite residential buildings erected before World War II such as the El Royale and Ravenswood in Larchmont and the Talmadge and Los Altos on Wilshire Boulevard.
But Caruso may have fueled the recent flurry of new construction with his posh 8500 Burton Way tower completed barely a year ago near the Beverly Center in Los Angeles. Top rents in the market when the project was planned were about $3.90 a square foot, and Caruso planned to charge $3.50 a square foot per month or more if he could get it.
“Before we even finished we saw huge demand on our waiting list and started moving up rents,” Caruso said. “We hit the $5 mark and that seemed to be no barrier at all.”
Caruso kept raising rents and recently signed a lease approaching $9 a square foot, he said. Rents for units in the oval-shaped, eight-story building commonly top $10,000 per month. Among the amenities are a car and driver to ferry tenants around. There is a sit-down restaurant and a Trader Joe’s store on the first floor.
Caruso is planning another apartment development in Los Angeles similar in scope to 8500 Burton Way, he said.
About half of his Burton Way renters have other addresses outside the city or even outside the country, he said, often using their apartments as an alternative to staying in a hotel. Full-time residents include doctors who work at nearby Cedars-Sinai Medical Center, bankers and entertainment executives.
Other categories of tenants in L.A.’s most expensive apartments include empty-nesters who no longer want the responsibility of taking care of a house and people who have homes outside the city who want a pied-a-terre.
Residents in upscale units like the Penthouses at Palazzo also tend to be single, broker Umansky said.
“They might be going through a change in life such as a divorce; making money or losing money, but they want to rent something really nice.”
Architectural design and top-notch appointments are crucial, he said, but so are locations in the midst of shopping and entertainment.
“This is all about an urban lifestyle,” Umansky said. “You won’t see luxury apartments up on Mulholland Drive.”