Conversion of Vacant Downtown Office Tower is So RAD
July 27, 2004
Real estate developers Forest City Residential, RAD Management and TMG have teamed up with MacFarlane Partners in a joint venture to convert a long-vacant downtown Los Angeles office tower into for-sale residential condominiums. It represents the first modern skyscraper in Los Angeles to be converted into housing. This plan is almost certain to be viewed positively by many city boosters and local politicians, as it not only adds additional housing units to the central city and continues to build on the growing momentum for a vibrant live/work environment in the region, but it also finally puts a positive turn to what has to be one of the sorriest development stories in the city.
The building of which we speak is the 37-story, 380k sf office tower at 1100 Wilshire, on the west side of the 110 Fwy, which has pretty much sat vacant, or close to vacant, ever since it was developed in 1986. It is within walking distance of the city's financial district and two blocks west of the shops and restaurants of Seventh Street Marketplace as well as the 7th Street/Metro Center public-transit station operated by the Los Angeles County Metropolitan Transportation Authority.
The development team plans to convert the property into approximately 230 luxury condominium homes, with model units slated to be available in the first quarter of 2005. The joint venture acquired the building, at the southwest corner with Bixel St, from Format Corporation, an affiliate of Formosa Plastics Corporation, Taiwan's largest petrochemical and plastics manufacturer.
We're told that the property sold for around $40 mil ($105/sf), slightly above the $37 mil asking price we mentioned in November 2003 when we last reported about the continued sales attempts of the asset. The CB Richard Ellis Urban Redevelopment Team, led by Marc Tarczynski and David Louie, represented the buyer and the seller in the transaction.
Originally built by Southeast Asian business tycoon Dr. Tsai Ming Yu during the last big office boom, in the late 80s, the developer was unable to lease it because, as the story goes, he insisted on rents equal to those on Bunker Hill at the time, even though tenants were unwilling to pay that rate for a building on the west side of the 110 Fwy. The building has since changed hands but still has not fared better. Many attribute part of the problem to the design of the structure, which places the office space on top of 16 floors of above-ground parking. Designed by A.C. Martin, the building offers unobstructed views of the Pacific Ocean, the downtown skyline and the Angeles Crest Mountains (assuming the smog permits). It is considered the most seismically advanced tower in Los Angeles (so we're told).
MacFarlane Partners is investing in 1100 Wilshire as part of its joint venture with the California Public Employees' Retirement System ("CalPERS") to invest in urban-infill properties in major metropolitan areas nationwide. CalPERS is the nation's largest public pension fund, with assets of $165 billion. "Downtown Los Angeles is quickly becoming a community where people want to live, work and play," says Victor B. MacFarlane, founder and managing principal of MacFarlane Partners. "We are pleased to work with this development partnership to help create what we believe will be a highly desirable downtown residence that features spectacular views of the Pacific Ocean, the Hollywood Hills and the L.A. skyline."
As we mentioned, the property features a novel design -- a 21-story, triangular, glass tower atop a 16-story, rectangular, granite and concrete parking structure -- that allows for unobstructed views in all directions. Zoning ordinances limiting development in the neighborhood should ensure that the views will remain unobstructed.
We're told that the conversion of 1100 Wilshire from office to residential usage will not significantly alter the building's configuration because, even though the tower was designed for office tenants, its floor plates and ceiling heights are well suited for residential use. The building renovation will create a more residential environment, with enhancements planned for common areas and the building entrance and lobby, and a landscaped, outdoor "sky deck" with infinity pool and arbor designed for the 18th floor, atop the parking structure.
The team's preliminary plans call for the construction of approximately 230 residential condominium units ranging from 550 sf to 2.3k sf in size. Loft units with ceiling heights of 16-feet to 21-feet are planned for the lowest two floors of the high-rise, with penthouse units envisioned for the top floor. Traditional flats will be built on the other 18 floors.
Other project and unit amenities will include:
- A three-story lobby encased in polished granite;
- 11 floors of parking;
- High speed Internet connections;
- Emergency helipad;
- Interior finishing including granite countertops, hardwood cabinetry, stainless steel appliances, gas stove-tops, washer/dryer hookups and central air and heating;
- 16+ foot ceiling heights and outdoor terraces for the loft units; and
- Each unit will be pre-wired for security systems.
Final unit plans and sales prices have not yet been determined. The year-long renovation and construction process is expected to begin in September, with condominium units expected to be available for occupancy by mid-2005.
MacFarlane Partners has teamed with both Forest City Residential and TMG on other residential projects. The condominium conversion at 1100 Wilshire is the third residential development in downtown Los Angeles in which San Francisco-based MacFarlane Partners has invested. 1100 Wilshire is Forest City Residential's seventh community project in downtown Los Angeles, and is its second venture with MacFarlane Partners. In a joint venture with Forest City Residential, the firm is developing Metropolitan Lofts, a 264-unit apartment building near the Staples Center.
TMG and MacFarlane are also part of a joint venture with Regis Homes of Northern California that is developing The Meridian Luxury Apartments at The Crossing|San Bruno, a 300-unit apartment community just south of San Francisco that will be completed later this year.