A Wilshire Blvd. Address Keeps Its Drawing Power : Brisk Condo Sales Reduce Huge Stock : First New Project in 5 Years Planned in Corridor Area
When Michael Reyes talked recently about developing yet another condominium project along Wilshire Boulevard between Westwood and Beverly Hills, people looked at him, he said, “as if I was in need of mental assistance.”
Until the recession hit in 1981, that stretch of Los Angeles was described as “a mile of posh,” “Park Avenue West,” “Avenue Foch--USA” and “the Golden Mile.”
Then some developers went bankrupt. Many high rises stood empty. And two towers were left half finished.
The picture is changing again, though the public’s perception of the area is still, as Reyes described it, “one of doom and gloom.”
State of Transition
Tom Gilleran of Gilleran, Griffin--a Westwood real estate firm--agreed, saying, “People still think the (Wilshire) Corridor is in trouble because there are no lights on in many of the units at night, but the Corridor is in a state of transition, not depression. Many units have been sold, but people just haven’t moved into them yet.”
His firm counted 948 transfers of title in the Corridor, not including bulk transfers, such as foreclosures, during the last 18 months. The 948 transfers include resales as well as units never before sold, but he indicated that sales of new units have been brisk this year.
Letizia Gelles, a Beverly Hills real estate broker who has been exclusively representing the Ten Five Sixty Wilshire building since October, 1985, said that when she started, only 20% of the inventory had been sold there “over a period of three years, but as of today, we have sold 90% of the (108) units.”
Since 1982, when she took over sales at the 82-unit Westford at 10750 Wilshire Blvd., and subsequently sold its 67 remaining units, most of about 1,200 new condos that were on the market in the Corridor when the market went flat have been sold.
A quick survey by Gilleran revealed that only 21 remain, and they are scattered in three buildings: Ten Five Sixty; the Diplomat, at 10350 Wilshire Blvd., and the Wilshire House at 10601 Wilshire Blvd.
Reyes said, “The numbers indicate that the Wilshire Corridor is one of the healthiest luxury residential markets around.”
That’s why he is planning to develop the 108-unit Dorchester at 10520 Wilshire Blvd. “It will be the first start (on a new project) in the past five years,” he announced. “We bought the property in June, and we plan to start construction in January.”
Condos were approved in the Dorchester’s tract map, “but lenders are leery of the condo market, so we’ve underwritten it as an apartment (project). If the market would firm up, we would sell it as condos,” he explained.
Stringent Standards
As for funding, he said, “We pretty much have our financing.” His Urban Pacific Corp. formed a joint venture to develop the property, he added, with VMS Realty Partners of Chicago, an investment company that appears to be well-heeled.
“VMS purchased the 12 Buckeye office buildings in Beverly Hills last March for over $300 million and four Tishman buildings in Westwood two months ago for $240 million,” Reyes said.
The Dorchester is being designed to have 16 stories. Yet, a plan proposed by Councilman Zev Yaroslavsky and enacted by the city in 1980 set such stringent standards for structures over six stories in height that Reyes called developing high-rises under the plan “not economical.”
He needn’t worry, because tentative map approval was granted for the Dorchester in 1980. “So we’re immune. We were grandfathered in, as were three or four other projects,” he explained, “but any new developments beyond these would be under the plan.”
Finite Supply of Sites
Consequently, although Gilleran calculates that another 600 to 700 condos could be built in the Corridor in the next few years, Reyes figures that only another 300 high-rise units could be built in the area. “The Wilshire Corridor has a finite supply of development sites and future product, so that’s our ballgame,” he said.
The Dorchester won’t be completed for 16 to 18 months, he estimated, and in the meantime, he has another thing in his favor: Soon there will be no sales along the Corridor other than resales.
Sales of new condos in the Corridor have slowed down with the season, Gelles said. Then, too, the remaining new units are not as salable, or desirable, as the ones already sold. (Preferred units sell first.)
However, despite the sales slowdown, Gelles expects that all of the inventory that was on the market when the recession struck will be absorbed in about three months.
“So, if I owned the Park Wilshire, I’d try to finish it in a year,” she said.
‘Rusty’ and ‘Dusty’
The Park Wilshire, a 160-unit development at 10724 Wilshire Blvd., is one of the two Corridor projects that have been standing half finished for some time. The other is the 135-unit Evian at 10490 Wilshire Blvd.
Gelles described the Evian as “rusty,” the Park Wilshire as “dusty.” The Evian is “an Erector-set type building made of steel,” and the Park Wilshire is poured-in-place concrete, she explained.
“Construction stopped on both about the same time, but the Park Wilshire isn’t as unsightly though it is an ocean of concrete.” Because of its visibility, the Evian and its plight have had more publicity.
“Goldrich & Kest had a one-year right to the Evian,” Gelles said, “and (New York developer) Donald Trump bid on it.” But the Evian was purchased last March by the New York-based Carlyle Co., which plans to start completing the building in February.
Site Cleaned Up
Reza Bashirrad, a Carlyle vice president, said by telephone from New York that his firm will have a total investment, including land, of about $65 million in the project, which he hopes to finish in 18 months.
“We have our zoning permit and our finalized drawings to get our construction permit,” he added. Barry Rakhshani, a Carlyle representative in Los Angeles, said that the site has been cleaned up, and the firm has “almost completed negotiating for the loan.”
What about the Park Wilshire? It has been owned since 1984 by Los Angeles-headquartered Sun Cal Properties. Douglas Duffy, Sun-Cal’s chief financial officer, said, “We would like to develop it, but something came up, and we can’t.” So Sun-Cal is selling the property.
“We had redesigned it, and it was ready to go, but we got an offer we didn’t want to pass up, and the property is in escrow. It probably won’t close until January,” he explained.
Rising Resale Market
Who’s buying it? “I can’t say, but the buyer is from out of state,” he replied.
Gelles termed it “a pity” that Sun Cal isn’t building out the Park Wilshire, “because the project could be the first (new one) to open its doors, and the demand is such that the first will be the first to sell.”
In the meantime, Gilleran expects the resale market to pick up. That market has been depressed, he said, because “there has been so much new product, but now that the new product is nearly gone, I think the resale market will kick into gear.”
That’s good, because some units bought in bulk by investment groups in the various new towers are expected to be added to the current 96-unit resale inventory. Among these will be 16 at the Wilshire House, Gilleran added.
‘Most Expensive Condos’
The Wilshire House is where two penthouses were offered a few years ago at $11 million each, including a Rolls Royce. Reyes said he found out that one sold for $3.8 million two years ago and that there is an offer on the other one, now priced at $5.8 million. “I’m sure it won’t sell for that,” he said.
Yet, sales prices are still good on the Corridor, Gilleran said, calling the units the “most expensive condos in L. A.” They have been selling, he noted, “for $190 to $300 a square foot and up, with penthouses going for more.”
And even some projects that went into foreclosure, like the 114-unit Mirabella at 10430 Wilshire Blvd., have been sold out, he said. That foreclosure occurred just about a year ago.
The future of the Corridor looks good to Gilleran, because “the quality is there, and the new tax law will spur sales in higher-priced homes.”
Gelles said that the Corridor condos are not just appealing to empty nesters but to businessmen and families with young children, as well.
“So my conclusion is that high-rise living is here to stay, and it seems that Los Angeles is urbanizing faster than many people ever imagined.”
