California’s construction sector has been a critical driver for economic growth in the region for the last few years. The southern California construction sector best depicts this. Since 2012, the employment rate in the southern California construction sector has been growing much faster than the overall rate of employment. In some years, at double or triple the rate.
Despite the effects of COVID-19 reducing construction volume, 2020 was still a positive year for southern California construction. With several mega projects in completion and others in the pipeline, forecasts for the California construction industry are positive for the coming years.
One such project that has elicited as much anxiety as it has excitement is the SoFi stadium in Los Angeles. Read on to learn more about SoFi Stadium and how it will impact the Los Angeles construction sector.
SoFi Stadium
In Los Angeles, Inglewood SoFi Stadium sits on a 298-acre sports and recreational complex. SoFi Stadium is the home for the NFL’s Los Angeles Rams. At a price tag of $5 Billion, it is the most expensive stadium in North America.
With the stadium now complete and in operation, construction in other areas of the sports and recreational complex will pick up the pace. The area will feature an artificial lake, casino, 3000 new residential units, hotels, restaurants, and a giant outdoor movie screen. In total, there will be 620,000 square feet of retail space, making the park a business hub.
The idea behind the whole project is to offer a wholesome experience for area residents and sports fans. Without a doubt, upon completion, the project will have a significant impact on the construction and business landscape in Los Angeles.
Impact on Pricing of Property
One thing that’s always sure to come with a mega construction project is an increase in property value in the area. The recreational complex offers immense opportunities to a wide range of businesses. These include retail stores, luxury hotels, and others. With this comes a rise in demand for property within the area, which pushes prices up.
Property prices in Inglewood have always been significantly lower than in other areas of Los Angeles. However, that has been changing since 2016, when the plans to build SoFi stadium kicked gear. Since then, the median price of houses has risen by 37.3% to $542,100. Over the same period, home prices in LA county have risen by an average of 18.7% to roughly $609,400.
Due to the rising prices, there is increasing concern from residents that they may be priced out of their neighborhood. To address this, a five-year rent control has been put in place by the city. In most cases, rent increases will be limited to 3%. This will protect current residential and commercial tenants.
The Rise of Apartment Buildings in Inglewood
Part of the project includes the construction of housing units that will come in the form of modern and luxurious apartment buildings and townhouses. The first phase is slated to open in the near future. It will feature 314 apartments ranging from three-bedroom units to studio apartments. Even if the pricing of the units has not yet been released, it will be significantly higher than the average in the area.
To capitalize on the boom in the area, other developers are also initiating such projects. This will see a significant rise in the number of luxurious apartment buildings in the area.
Effect on Commercial Buildings
Along with the 3,000 residential units, there will also be over 200,000 square feet of retail space featuring classy office buildings. This area will primarily be occupied by large corporations such as financial institutions. Therefore, prices are expected to be high.
For companies and businesses that miss out on commercial space near SoFi stadium, the next best location will be the surrounding Inglewood area. As the demand increases, prices for commercial space will also shoot up.
How Will Prices be Post-COVID
The only regret with the SoFi stadium for the developers is the timing of its completion. Since operations began during the COVID-19 pandemic, the project’s full potential and impact are yet to be realized. Only after a vaccine is rolled out successfully and fans allowed inside the stadium will businesses reap the benefits.
When this happens, there will be greater urgency among investors to secure commercial space in the area. As such, you should expect a surge in property prices once activity in the stadium increases.
Get Ahead of the Pack
For developers, SoFi stadium, and the recreational park surrounding it presents an incredible opportunity. Any investment in the area will surely rise in value in the coming years. However, you should not do it blindly.
Build Analysis is a company dedicated to helping construction companies achieve their goals by assessing project risks and offering solutions. Contact us today to get your construction project started on the right foot.
