Volume can be addicting. Once you've roamed under 22-foot ceilings, it's hard to go back to standard-issue 9-foot height. This is something with which Alessandro Cajrati Crivelli is intimately familiar. "I feel like I'm living on the edge of poverty under 9-foot ceilings," says the Italian transplant, his voice echoing all the way up to the nearly triple-height ceilings of a mega-spec mansion he's building in Holmby Hills.
More than 130 workers are scattered throughout the sloped, 1.3-acre job site, where a modestly large and cozy Cape Cod now is being replaced with a hotel-sized, rigorously right-angled ode to minimalist design. Forget the fact that residential construction still is down 40 percent nationwide, says Jed Kolko, chief economist at real estate site Trulia.
Here in L.A., it's boom time for a tiny group of developers, builders, architects and realtors dedicated to building and selling megamansions on spec. The homes are almost universally monolithic, modern and filled with enough high-tech amenities to lure trophy home-hunting buyers from halfway around the world. So why isn't anyone living in them?
Crivelli is very aware of his end user. As the CEO of Estate Four, a wildly successful, mostly commercial real estate firm that has developed millions of industrial-chic square feet for the fashion set in Milan, London and New York — Tom Ford, Ferragamo, Giorgio Armani and Prada are all tenants — Crivelli came to Los Angeles two years ago with a different goal: to fill what he calls "the massive hole in the L.A. market for well-made, sophisticated homes. I create homes for the 1 percent of the 1 percent."
The developer has been on a house-buying binge since 2011, gobbling up five properties in Bel-Air and Holmby Hills, including a 3.6-acre site on Angelo Drive that neighbors Hyatt Hotel heir Anthony Pritzker's 49,300-square-foot compound and Rupert Murdoch's 13-acre Moraga Vineyards, which he recently purchased for $28.8 million.
Construction permitting was fast-tracked, demolition of most of the homes has been completed, and along the way, Crivelli tapped some of the city's top architects — Zoltan Pali, Marmol Radziner — to create a quintet of hypercontemporary glass-and-concrete compounds that will come in at between 11,000 and 20,000 square feet. "Richard Neutra on steroids," is Crivelli's description of the architectural style. All will be developed speculatively.
The Holmby Hills project will be the first to be completed: The 22,000-square-foot home will have Molteni handmade kitchens (two of them), handcrafted closets (12 of them) as well as a Harley Pasternak-designed gym, grass tennis court, infinity pool and enough wall space to lure a museum curator into an art-acquiring frenzy. The house will come onto the market in October for between $50 million and $55 million. (According to public records, Crivelli purchased the property for $7.95 million in 2011.) And don't go looking for ocean views here. The three-story house faces the canyon and its old-growth trees.
A developer's pipe dream? Not likely, says Billy Rose, co-founder and president of real estate firm The Agency along with Real Housewives of Beverly Hills husband Mauricio Umansky. Rose is an entertainment lawyer turned movie agent turned developer who built a dozen spec homes himself between 1998 and 2011. That period, however, turned out to be a mere pregame diversion compared to the primetime spec-home action taking root in Los Angeles now. "Back when Megan Ellison bought [designer] Steve Hermann's place on Nightingale in 2008, that was considered to be the pinnacle of the spec market — $12.5 million for 5,500 square feet in the Bird Streets? It's not like it was Carbon Beach." That was then.
Now, spec homes are driving the top of the Los Angeles real estate market both in terms of square footage and sales prices, attracting a global market previously unseen. "It used to be 5,000 to 6,000 square feet was about as big as you got with these kinds of homes," says Rose. "Now 13,000 square feet is sort of the entry level for spec homes, and we're routinely trading at $2,000 a square foot. That, by the way, came out of nowhere. It started the last quarter of 2012 and is now the going rate." So what changed?
Rose and others are clear: the buyers. "There is no question that foreign capital is pouring into the U.S. high-end real estate market," says Eric Sussman, a senior lecturer at UCLA's Anderson School of Management. "If you look globally, Hong Kong, London and New York have extremely high square-footage values. Los Angeles is a bargain comparatively. The buyers here are primarily from Asia and Russia, they pay all cash, and they feel the L.A. housing market is a modestly low-risk, very safe investment," says Sussman.
David Parnes, co-founder (with James Harris) of Bond Street Partners, in association with Partners Trust Beverly Hills, agrees. "It's international billionaires who are buying up these homes. Most are coming from China but also from Malaysia and Russia and everywhere in between." It was a Malaysian billionaire who purchased an 18,000-square-foot spec built on the former Ricardo Montalban estate in the Bird Streets. Dean McKillen (son of Irish investor Paddy McKillen, owner of Claridges, The Connaught and The Berkeley) developed the project, which sold for more than $38 million in 2012. That owner is said to be looking for even more space by excavating 80,000 square feet under the home without altering the existing house.
Another project in the Hills, developed by Nile Niami — a former movie producer whom many refer to as the king of the new wave of spec house development in L.A. — measured a mere 8,000 square feet. The Winklevoss brothers purchased that for a reported $18 million in 2012, but the former Facebook twins are not typical spec buyers. Says Parnes: "There are a handful of celebrity buyers, but it's the exception. What is consistent is that the highest price per square foot is achieved by high-end spec homes in L.A. in specific areas: Bel-Air, Holmby Hills, Sunset Strip and Beverly Hills/Trousdale. They're the top areas for this kind of development because you get that magic combination needed for a successful spec: land, architecture and views."
Call it the era of the empty trophy home. Because the majority are being purchased as investments, not primary residences, most specs largely remain unlived in. Those La Cornue ranges and soaring Fleetwood pocket doors, those climatized wine rooms and the chroma-therapy showers, the PRIMA-powered screening rooms, not to mention the blue-chip art installed by a new breed of decorators paid to design and stage the homes, most of which are purchased fully furnished, all will go unappreciated 358 days a year. Says designer Paul McClean: "These are buyers who just aren't going to be spending much time in these homes. They start with a house in London, then in New York, then they realize the weather is crap in both, so they get a home here. But it's more about collecting homes, not living in them." And they're getting bigger by the minute, says the designer.
"I've never designed on this scale before," he says of his five spec projects in development, which range from 20,000 square feet to a 60,000-square-footer located down the street from Jennifer Aniston's Bel-Air estate. "No matter what we build, there's only one complaint: They're too small." But if the buyers have changed radically, the developers have too.
A new breed of speculative home developer has come to reign in Los Angeles, a cadre of mostly industry defectors and moonlighters who have discovered a series of highly translatable skills between moviemaking and spec home-building. "Feature film production and high-end home-building are surprisingly similar in their paradigm," says Michael McDonnell, who switched from producing films like The Usual Suspects to becoming a developer/general contractor five years ago. "No matter how much research you do to put a movie together, you don't know what is going to happen opening night. Similar with a house, you don't know what the market is going to do once it's completed," says McDonnell, who has developed mostly large-scale Malibu projects like Bird View, a 10,000-square-foot spec that he collaborated on with architect Doug Burdge (who has worked with Barbra Streisand, Matthew McConaughey and Mark Burnett).
The home was sold to a Chinese buyer for $21 million in 2012. Pulp Fiction actor Brad Blumenthal and business partner Leo Hauser spent three years building a 10,500-square-foot spec designed by Hagy Belzberg. The two purchased the property above the Sunset Strip for $3.76 million in 2010 and replaced it with a six-bedroom contemporary stunner that is listed with The Agency for $28.8 million.
Tom Fanning, a former music video producer for The Rolling Stones, Britney Spears and Jennifer Lopez, turned to home developing 15 years ago when he founded The Bowery Design Group. "Tom pretty much owns the Bird Streets at this point," says Rose. And Jeff Franklin, the creator of Full House, is working with top architect Richard Landry (Gisele Bundchen and Tom Brady, Eddie Murphy) on an equally large-scale Sunset Strip home that will feature 270-degree city views. Not that every developer comes with industry connections.
Elaine Culotti has flipped existing homes in L.A. for two decades. More recently, she's moved into the spec market and is busy at work on a pair of projects in Pacific Palisades. Culotti purchased a 6.5-acre lot down the block from Rihanna. She split the parcel and is building two estates, one a "traditional Argentinean," the other a "contemporary organic," as she calls it.
"Both will have chef's kitchens, bars, theaters, horse stables and pool cabanas," she says. "For one of them, I'm thinking about doing a recording studio that looks out onto the riding ring." Each will measure 12,000 to 15,000 square feet, and Culotti estimates that, together, the properties will fetch $30 million. "The spec market is extremely exciting right now," she says. "Every day, everything is worth more money when we wake up. L.A. real estate is gold right now, and where else are you going to put your money?