This Is Why Building Apartments in Los Angeles Has Become a Terrible Business.
From Land Purchase to CoO: More Than 6 Years
At a glance
not yet published
21 studio · 46 one-bed · 25 two-bed
per unit avg
building
0.63 acres · LAC4
CoStar avg, subject property
Beverly Hills / Century City / UCLA cluster
Beverly Hills/Century City/UCLA
broader LA market
125 subterranean · 7 surface
CoStar submarket comp avg
delivers Jul 2026
What matters
- Time Is one the Biggest Cost The site was acquired in April 2020. Construction didn't begin until January 2024. Leasing is expected around September 2026. Every month added interest, taxes, insurance, and carrying costs before a single dollar of rental income can be collected.
- The Land Cost Was Only the Beginning. The former Wally's site traded for approximately $16.2 million before demolition, entitlements, permits, construction financing, hard costs, soft costs, and lease-up expenses. Just weeks later, COVID changed the development landscape. By the time construction began in 2024, financing costs, construction pricing, and insurance had all materially increased, forcing the project to build through one of the most difficult cycles.
- This Is Why Developers Build Less. Developers don't stop building because they dislike housing. They stop building because the numbers no longer justify the risk. After six years, no developer knows exactly what rents, interest rates, insurance costs, or capital markets will look like by the time they get to leasing.
- The Costs Don't End at Certificate of Occupancy. Many people assume the financial pressure ends once a project receives its Certificate of Occupancy (CoO). It doesn't. In California, developers typically receive a supplemental property tax assessment after construction is completed. The county reassesses the property based on its newly completed value, often resulting in a significant one-time tax bill that can arrive 12–24 months after the CoO. Many developers budget for hard costs and financing but forget about California's supplemental property tax reassessment after construction. We experienced this ourselves. The building may be complete, but another meaningful bill can arrive 12–24 months after the Certificate of Occupancy.
What an Operator sees
Most people will drive by this building and see 92 brand-new apartments.
I see six years of risk.
The developer bought the former Wally's site in 2020, survived COVID, watched interest rates more than double, absorbed construction inflation, carried the land for years before vertical construction even began, and still has lease-up risk ahead. Even after the building opens, California will likely send a supplemental property tax reassessment 12–24 months after the Certificate of Occupancy—one more reminder that the bills don't stop when construction ends.
I know this because I lived a similar story just down the street. I owned 2270 Westwood Boulevard and planned to build apartments there. After COVID, the numbers no longer worked. Construction costs increased, financing became dramatically more expensive, and the project no longer penciled. I ultimately sold the property to an owner-user instead.
That's the lesson here.
When people ask why Los Angeles doesn't build enough housing, the answer isn't that developers don't want to build. It's that too few projects can survive the journey from land purchase to first tenant. Until that timeline becomes shorter, more predictable, and less expensive, we'll continue producing fewer apartments than the city needs.
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I research these transactions to sharpen my own investment strategy and share what I find so Los Angeles owners, brokers and investors can debate the market with better information.
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Property and transaction data: CoStar Research.
Write to David Safai at David@AtlasBrief.La
Appeared in the Sept. 6, 2026 edition of The Tape.