The loft conversion boom reads like an obituary: #LA #Historic
Downtown Los Angeles — Loft boom (2003 to 2013), died three years ago at the age of 10. The large number of conversions was part of the transformation and renaissance of Downtown Los Angeles from a place of blight to a prosperous, rapidly growing area of urban renewal, attracting the middle class and wealthy to return to the Downtown area. The loft conversion boom died at the end of 2013 after the birth of its last child, Barker Block Warehouse One
From 2003 to 2013, many old LA buildings were converted to live/work lofts under the City of Los Angeles Adaptive Re-use Ordinance. Since then, one developer attempted to go condo with an already converted loft rental historic building called The Title Guarantee Building by Pershing Square. The loft condominium sale was abruptly called off just hours before Downtown agents were schedule to meet for its launch briefing. The Downtown specialist agents and brokers were bummed because selling conversions accounts for up to half of their incomes. While the developer would not provide a reason for the sale cancellation, the rationale is clear… like other loft conversions before it, the developer planned to sell the units as condos, but later crunched the numbers and realized that the long-term big money is in renting out the units, not selling them. Title Guarantee was not alone in being built for sale but then never selling; Chapman Flats, The Brockman and others were designed to be condos, and may still go condo when the time is right.
As Downtown rents skyrocket, increasing on average more than $400 per month in less than 3 years, landlords and rental building owners have profited handsomely. With now more than 500,000 jobs, Downtown LA is a boomtown of employment and rentals. Of course, most DTLA condo owners are doing well, sitting pretty on loads of equity, and able to lease out their units at higher-than-expected rent amounts. Many new apartments are being built recently, as well as a few new high-rise condo buildings such as Metropolis and Ten50. As renters continue to flood into Downtown, the rental boom is expected to continue for many years, while those who prefer to own a historic loft are left with a very dwindling inventory and pricey choices. Many Downtown home buyers now end up buying homes outside of Downtown, such as the new homes on the LA River.
The death of the conversion boom is not necessarily all bad. The lack of new conversions creates scarcity and higher prices, thus leads to more value and equity for those who own a historic Downtown loft.
Mills Act historic lofts can offer potentially very big property tax savings. Which historic loft buildings are most likely to go condo next? Get on the New Lofts Interest List. Fill out my online form:
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Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 Not associated with the homeowner’s association, seller or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.
Based on information from the Association of REALTORS®/Multiple Listing as of [date the AOR/MLS data was obtained] and /or other sources. Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.
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