Lowe Takes Up Challenge on Golden Mile : Price Cuts Used to Attract Buyers to Repossessed Mirabella Condos
For firms like Lowe Enterprises, which focuses on solving major real estate problems for bank clients, the Mirabella assignment on the Golden Mile of Wilshire Boulevard offered a distinct challenge.
About five years ago, trumpets heralded a euphoric destiny for that rich stretch of real estate between Beverly Glen and Westwood boulevards where developers had launched almost $1 billion in new high-rise, high-quality condominium construction.
Investors had aimed their sights at the highest level of affluence with an expectation of vast profit margins.
Today, nearly all of the 11 completed structures along the Golden Mile, with units once advertised at up to $11 million and touted for their extraordinary amenities, have been repossessed by the lenders, and most of the original developers are no longer around.
Doomed to become part of a graveyard of steel and concrete mastodons, some of the projects managed to survive. Others, like the Evian--a rusting ghost-like steel skeleton--and the Park Wilshire, serve as grim reminders of projects unfulfilled.
There is, however, an upside story to tell--Lowe’s results in the current marketing, for Interstate Bank, of the Mirabella at 10430 Wilshire Blvd.--that could point the way to new prosperity for the Golden Mile.
“Since starting our campaign in May of this year, we have sold 40 units,” Lowe’s senior vice president Robert M. Weekley reported. “This is quite a success story when you think that only 19 units sold prior to the bank takeover and since completion of the building in 1982. That’s three years.”
What is Lowe’s marketing secret?
“A simple matter of restructuring the prices to a realistic level for a rapid sellout, in some cases to about 50% of the original asking prices,” the executive explained. Unit prices which formerly ranged from $500,000 to $1 million are now offered in the low $300,000 to mid $600,000 range and penthouses previously priced upward of $2.5 million have been reduced to $1.5 million and under.
Part of the strategy has been to provide the purchaser with a realistic buy and to give that purchaser the opportunity for future price appreciation, Weekley added.
Lowe Development Corp., the firm’s subsidiary that is marketing and managing the property, bases its prognosis for the area on the limited supply of land along that stretch of Wilshire Boulevard and also on the ever-tightening zoning regulations which include off-Wilshire access. “Those kinds of limitations will surely drive the prices up eventually,” Weekley maintains.
The condominium saga began with a few apartment conversions and the completion of the Westholme in 1976, an early bank takeover which turned out to be successful at $60 to $80 per square foot, and completion of the Longford in 1978, also successful at $120 to $175 per square foot.
The problems developed later, Weekley said, when developers started building more units that were larger and more luxurious, with prices going as high as $400 per square foot. With several projects coming on the market simultaneously, the problems of the early 1980s were compounded.
Lowe Enterprises got its “feet wet” on the Golden Mile with its previous assignment, the 108-unit L’Elysee (across the street from the Mirabella), which was repossessed by Security Pacific National Bank in 1984.
“Each of the buildings along the Golden Mile offers different marketing possibilities,” Weekley explained, “and each has had varying degrees of success.”
L’Elysee, with smaller units ranging from 1,600 to 2,000 square feet, was more suitable as a rental project. After remodeling the public areas and the units, Lowe was quickly able to establish successful occupancy and sell it to a new owner.
With the Mirabella and its larger units, plus its higher construction costs, the rental approach was not realistic, Weekley said. “We decided to face the problem head on and that meant to come down on the prices, to do some necessary work on the building, start a new sales campaign focusing on reduced prices and bank financing that offers an 11 3/4% fixed, 10-year mortgage. We knew people wanted to be in that building and it was a matter of considering a realistic financial threshold. People are not wealthy because they’re stupid.”
The 23-story Mirabella, according to Lowe, has a distinct advantage over some of its neighbor projects because it is on a corner (southwest corner of Holmby Avenue), because it is located on one of the highest elevations along Wilshire Boulevard and because of its six-cornered design which provides each of its 108 units a corner unit with views in several directions.
Part of the marketing psychology implemented by Lowe included moving the sales offices and model units from the second floor to the 12th floor--which would give prospective buyers a better perspective of the superb views which the building commands, Weekley said. Another important sales factor is the reward system developed by Lowe for its sales people that includes going to the carnival in Rio de Janeiro next year.
About $200,000 was spent recently on cosmetic and functional improvements to the Maxwell Starkman Associates trapezoid-designed building constructed by Swinerton & Walberg. Built during the boom era of the early 1980s along the corridor, it exemplifies the luxury touches which were part of a competitive “can-you-top-this” effort among developers.
The high-rise residences have two bedrooms and 2 1/2 baths and range in size from 2,076 to 2,862 square feet. Double-door entries lead into large foyers, and flexible ceilings permit the buyers to dramatize certain areas. Some have separate dens, formal dining rooms and second terraces and second fireplaces. Master bedrooms have spacious closet rooms and customized baths, some with terrace access.
The six penthouses are two-story units with two to four bedrooms, ranging in size from 3,424 to 4,682 square feet. The Mirabella outdoor common areas feature swimming pool, spa, sun deck and other amenities, including conference rooms and state-of-the art security.
Lowe has developed and managed more than $500 million in all types of real estate including commercial, residential and resort properties in the United States and Canada, and clients also include Chase Manhattan Mortgage and Realty Trust, Wells Fargo Mortgage and Realty Trust, Hartford Insurance Group, Federal Savings & Loan Insurance Corp. and Crocker National Bank.
