Putting on the Ritz in Downtown LAby
For decades Los Angeles-based KB Home was the classic suburban homebuilder, putting up acres of tract homes in booming sunbelt cities such as Phoenix, Dallas and Las Vegas. The business model hadn't change much since William J. Levitt cranked out cookie-cutter homes in Levittowns in the 1950s and 1960s. A couple of years ago KB ceo Bruce Karatz began charting a different course, building condos and townhouses in or near downtowns in cities such as San Jose and Los Angeles. Karatz' KB Urban unit just announced an extreme extension of that plan, partnering with Marriott Corp. to build a 1,000-room hotel complex that includes a Ritz-Carlton and Marriott Marquis adjacent to the Convention Center in downtown L.A.
The 54-story, $750-million project will be one of the tallest in the city. The crowning--literally--achievement for KB will be the sale of 216 luxury condos on the top floors of the hotel. This is new territory for the company and a recognition that as the housing market cools, land becomes scarcer and the population ages, traditional home builders will have think more broadly if they want to keep growing. Bruce Karatz and his peers will start thinking more like Donald Trump than William J. Levitt.