Unfazed by the Covid-19 downturn, Crown Group is forging ahead with plans for its expansion to the US, securing land for a planned $US500 million mixed-use tower in downtown Los Angeles.
The Sydney-based group is progressing a development application with Los Angeles City Hall for the 43-storey, 163-key Koichi Takada-designed tower in a former warehouse district on the corner of South Hill and 11th streets, with completion slated for 2024.
A joint venture between Crown, Singapore-based Magnus Property and Indonesia’s Agung Sedayu-backed property developers ASRI purchased the site at 1111 Hill Street from South Hill Holdings in November for $US26 million ($A41m).
Crown Group chief executive Iwan Sunito said the downtown district of LA has experienced a significant transformation over the past decade, with numerous residential, hotel and commercial developments.
“It’s rare to find the central district of a large cosmopolitan city on the verge of such significant change.
“Downtown is experiencing a once in a generation revival—led by the heightened convergence of tech, media and entertainment in Los Angeles,” Sunito said.
There’s a great deal of investment and it’s exciting to think of what Downtown will be like in another few years’ time.”
Speaking as part of The Urban Developer's live webinar series, Sunito said a driving force in its investment push had been Los Angeles’ status as host city for the 2028 Olympics.
“This is a city that’s one of the biggest economies in America, but yet lacking infrastructure—the 2028 Olympics is pushing them to invest in all of this infrastructure.
While still upbeat about Crown Group’s prospects both in Australia and overseas, Sunito concedes that uncertainty due to the coronavirus pandemic would make its planned 2021 IPO “a challenge”—at least in the short-term.
“It’s still something that I want to do, it’s about leaving a legacy, leaving the next generation of leaders to continue, and it's also co-sharing what we’ve built together with our staff.”
Since its establishment in 1996, the privately-owned Crown Group has evolved from a boutique operation to one of the nation’s most prolific development companies, with a multi-billion-dollar pipeline of projects in Australia and beyond—and he's philosophical about the current situation.
“To me, crisis is like nature teaches us: like trees, during summertime—the dry season—the roots go deeper to find a new source of life...we'll find a way.”
No stranger to adversity, Sunito—who recalls swimming in crocodile-infested waters as a child raised in the “jungles of Indonesia”—said the “accept, adjust, and accelerate” mantra that saw Crown Group weather the 2008 global financial crisis would stand the company in good stead to deal with Covid-19.
“We’re just going to have to accept there are things we cannot control”, Sunito said, adding that focusing too much on the negatives can cloud people’s judgement about how they can adjust to what is possible.
“The reality is, as bad as it is for one group of people, it is not bad for others…you just kind of have to adjust and then use that adjustment to accelerate the business.”
Sunito believes this kind of "blue ocean" thinking allows us to recognise the deeper potential of unknown market spaces and opportunities for growth.
“Crisis or no crisis, we’re in business…you take the good and you take the bad and you take the ugly along the way and you work around it,” Sunito said, adding he’s still confident about Crown's investment markets—Sydney, Melbourne and Brisbane.
“The good thing about being a private developer [is that] half the time you make a decision against the trend.
“When people are building, that’s the time that I’m cautious there’ll be too many products in the market towards the end - but when people are scared, that means they’re really not building, and I jump in at that time.”
While others in the industry were retreating, Crown fast-tracked the opening of its Skye Suites development within its striking, loop-shaped $575 million Infinity project in Sydney, opening the hotel three months earlier than planned, in response to the surge in demand from the long-stay market prompted by the Covid-19 situation.
“I see opportunity in the hotel industry, especially in our space, which is serviced apartments,” Sunito said of the decision to offer stays of three months or more to long-stay residents, tapping into an emerging trend towards corporate employees coming “home” to Sydney from elsewhere, and high-net-worth individuals such as “husband and wife doctors”.
Sunito says Crown saw the trends changing, even before the pandemic.
“What this crisis did was accelerate the changes.
“People want to have conference facilities at home, the ability to connect around the world, so high-speed internet and the ability to [have a] conference in a proper setting is important, so people can do business from home.
“A co-working environment, a space within the space of the apartment is important. Luxury today is a co-working space within the development, and we see that trend across the world.”
For “cashed-up” buyers at least, Sunito says, “'where’s my cigar room?’ ‘where’s my whiskey room?’ was the ‘luxury’ of the past”.
“Luxury today is, 'Where’s my conference room?’ ‘Can I book working space?’ ‘Can I have a meeting? ‘Can I have a space where I can mingle with others?’
“We know that the boundary between public and private [space] is diminishing now and people are merging together, people want to share ideas—that’s where I see the changes now.”