Apartment units may be built atop a luxury car dealership in Los Angeles in a sign of how builders in responding to the need for more housing in a city with limited development options.
The project, called Mercedes-Benz Tower, is planned for 16747 W. Ventura Blvd. in the Encino neighborhood, according to city documents. The proposed development would feature 104 market-rate units and 26 affordable units above a Mercedes-Benz dealership.
Mercedes-Benz is just the latest big-name brand to involve itself in a Los Angeles area apartment project. Massive retail chain Costco plans to be the ground-floor tenant in a multifamily project in L.A.'s Baldwin Hills neighborhood.
The new project's applicant is Los Angeles-based car dealer Trophy Auto Group, which now operates Mercedes-Benz of Encino on the property. Jason Majzoub, director of development projects and real estate of Trophy Auto Group, told CoStar News that he couldn't provide a construction timeline as the developer was working to get the city and residents near the project to embrace the proposal. Majzoub declined to answer other questions.
The Mercedes-Benz Tower would feature studio, one- and two-bedroom apartments, according to city documents. In addition, plans call for a pool, fitness center and rooftop lounge.
"Given the limited amount of development sites in Los Angeles, it makes sense that developers see opportunity in creating mixed-use projects with apartments on the upper floors," said Ryan Patap, senior director of market analytics for CoStar Group in Los Angeles.
Meanwhile, cars and other luxury brands increasingly are incorporating themselves in residential developments. South Florida already features a Porsche-themed high-rise with a 62-story Bentley Residences slated to break ground in Sunny Isles Beach, Florida. Properties with a mix of uses, including car showrooms, aren't unusual in Southern California. An apartment and auto showroom project was approved in Newport Beach in 2021, according to city documents. Meanwhile, the first floor of an office building in Beverly Hills is expected to become a Rolls-Royce dealership.
Los Angeles is among the most expensive places to live in the United States due to a lack of housing supply. The central San Fernando Valley apartment market, which features Encino, has average monthly rents of $2,013, below the greater L.A. average of $2,220, according to CoStar data. The market's vacancy rate is 3.1%, below the greater L.A. average of 4.9%.
If built today, the Mercedes-Benz Tower would roughly quadruple the number of multifamily units under construction in the tight central San Fernando Valley apartment market, according to CoStar data.