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More Conversion Confusion
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| The tangled tale at 308 E. Ninth St. involves business owners who believe they are being pressured to leave, a building owner who wants to turn the property into apartments, and past instances of people living in the structure, even though it was not zoned for residential use. Photo by Gary Leonard. |
When a Commercial Building Goes Residential, the Future Is Uncertain
by Chris Coates
It was about two years ago when Debra Stevenson and Carlos Alberto Gutierrez decided the future of their boutique design firm was in Downtown Los Angeles.
After searching for a workspace for their business, Skyline Studios, they stumbled on a 2,000-square-foot commercial loft at 308 E. Ninth St. that Stevenson said was advertised as a mixed-use building with 15 live-work lofts.
"We wanted a larger space so clients could come look at our work," said Stevenson, who signed a four-year commercial lease with a two-year extension option for the third-floor space.
So, it came as a surprise last fall when Stevenson, midway through her lease, read in the Los Angeles Downtown News that their building was to be turned into apartments.
"Lo and behold, our very own address was listed," she said. "It was the first time that we knew anything about this proposed renovation."
The unexpected news of one's building being converted for some residential use is far from unusual in Downtown, where a handful of properties have "gone condo" recently. But what makes the tale of 308 E. Ninth St. unique is that the building was, apparently, never supposed to have residents in the first place.
"All their leases were very clearly either for showrooms or studios," said Jack Ravan, president of South Park Group, which owns the brick building. Ravan contends that 308 E. Ninth St. was never advertised for residential occupancy and that people living there did so in violation of zoning laws. "No one had a residential lease," he said.
Going Rental
Ravan says he has long planned to turn the 73,000-square-foot industrial building into residential units. About a year ago, he connected with Santa Monica-based architect David Gray, who drew up plans to turn the structure into 38 apartments averaging 950 square feet.
Ravan, whose company owns a number of properties in West L.A., said notices were mailed and hand delivered to occupants, which included artists, designers and a light manufacturing company. "They all knew eight, nine months ago that we were planning to do this," he said.
Ravan said tenants had the option to either wait out their leases or have their original leases bought out by his company. He would also pay $3,300 in relocation costs.
Ravan wanted the transition to go smoothly, but soon it became clear that tenants, some of whom were living in the building, took the notices as a threat of eviction and refused to budge.
The situation grew heated last October when Ravan applied for permits to convert the building. As part of the process, city inspectors examined the structure and found people living in units - even though the building didn't have a certificate of occupancy and was zoned industrial. Ravan said he was told by inspectors that people couldn't live there.
Ultimately, 19 tenants opted to take the buyout and "had no issues whatsoever," Ravan said. "Many of them have even looked at plans to see if maybe they wanted to move back into it."
Paul Linkogle, who works as a prop master, rented space in the building for about four years and took the settlement. Linkogle, who admitted to living in the building at times, said the process went smoothly. "I was happy enough about it," he said. "I don't want to stand in the way of progress."
Eventually, every tenant moved out. Except one: Skyline Studios.
"[Ravan] represented this as a live-work space and that's what we came for," Stevenson said. "We have a valid lease that extends for another two years."
She refuses to sign the relocation agreement or move, instead staying even as demolition work continues. She said the dust and noise is an effort by management to force her out of the building.
"It's kind of like retaliation," she said. "It's harming our business."
Contentious Process
While 308 E. Ninth St. is transforming live-work units into apartments, the more common conversion in housing-starved Southern California turns apartments into for-purchase residences. Egged on by creative lender financing and rock bottom interest rates, the changeover can mean big, immediate returns for property owners.
If it's any indication, one of the biggest Downtown real estate deals last year concerned Savoy, a 303-unit project at First and Alameda streets. It was developed by Trammell Crow Residential as apartments but, even before it opened, was re-envisioned as condos and put on the market. The building, which Trammell Crow officials in 2005 said would cost $65 million to develop, sold in January for $114 million.
Savoy was empty at the time. Rarely do changeovers go so smoothly.
Perhaps the most rancorous Downtown change in recent history (there are still people angry about the Victorian homes removed from Bunker Hill in the 1960s) came in 2004 when the residents of the 135-apartment Higgins Building at Main and Second streets were told they had to vacate within 60 days as the property was being converted to condominiums. The maneuver enraged some residents, and many left. At least five sued owner Barry Shy.
It was a similar scene at Little Tokyo Lofts after Hammer Ventures last year announced that 161 apartments would be turned into condominiums. Residents said they were not kept informed of the conversion specifics and schedule, and rumors spread that they would be kicked out. Fed up, many eventually moved.
For these reasons, residential conversions can be highly contentious, especially in places like Downtown, where the apartment vacancy rate is just 2%, said Dr. Delores Conway, director of the USC Casden Real Estate Economics Forecast.
"If the building is converted, there's not a lot of options," she said. "There are definite reasons the tenants would want to stay put."
Waiting It Out
Another twist with 308 E. Ninth St. is that the change would not force Stevenson to scramble to find a home. She says she does not live in the building, and that she owns a condominium nearby.
Instead, Stevenson says, it's a matter of principle. She argues that she and Gutierrez have spent a significant amount of time and money building out the existing space into a sample kitchen and bathroom to display their designs. Building management has yet to offer a comparable unit to the one she rents, said Stevenson, who is also demanding relocation fees and a refund for lost business.
"They say they would like to work with us but there hasn't been anything put on the table," she said.
Ravan said he has offered Stevenson and Gutierrez a number of spaces and even an apartment in the building once it is completed. They have refused all the offers, he said.
Yet Ravan also said that he is reconsidering the project. "We're still debating what we plan to do with the building. We may turn it into a hotel or something. We may tear it down. We may turn it all back into showrooms," he said.
Meanwhile, demolition of the building is underway, although construction has not started. The owner is on track to receive permits for the conversion, said Hamid Behdad, head of the city's adaptive reuse program.
While Ravan denied Stevenson and her studio are behind the delays, he did admit it is a difficult situation.
"Everything is up in the air," he said. "Right now, they pay their rent. We may just wait for their lease to be up before we do anything in the building."
Contact Chris Coates at chris@downtownnews.com.
page 1, 4/10/2006
© Los Angeles Downtown News. Reprinting items retrieved from the archives are for personal use only. They may not be reproduced or retransmitted without permission of the Los Angeles Downtown News. If you would like to redistribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
After searching for a workspace for their business, Skyline Studios, they stumbled on a 2,000-square-foot commercial loft at 308 E. Ninth St. that Stevenson said was advertised as a mixed-use building with 15 live-work lofts.
"We wanted a larger space so clients could come look at our work," said Stevenson, who signed a four-year commercial lease with a two-year extension option for the third-floor space.
So, it came as a surprise last fall when Stevenson, midway through her lease, read in the Los Angeles Downtown News that their building was to be turned into apartments.
"Lo and behold, our very own address was listed," she said. "It was the first time that we knew anything about this proposed renovation."
The unexpected news of one's building being converted for some residential use is far from unusual in Downtown, where a handful of properties have "gone condo" recently. But what makes the tale of 308 E. Ninth St. unique is that the building was, apparently, never supposed to have residents in the first place.
"All their leases were very clearly either for showrooms or studios," said Jack Ravan, president of South Park Group, which owns the brick building. Ravan contends that 308 E. Ninth St. was never advertised for residential occupancy and that people living there did so in violation of zoning laws. "No one had a residential lease," he said.
Ravan says he has long planned to turn the 73,000-square-foot industrial building into residential units. About a year ago, he connected with Santa Monica-based architect David Gray, who drew up plans to turn the structure into 38 apartments averaging 950 square feet.
Ravan, whose company owns a number of properties in West L.A., said notices were mailed and hand delivered to occupants, which included artists, designers and a light manufacturing company. "They all knew eight, nine months ago that we were planning to do this," he said.
Ravan said tenants had the option to either wait out their leases or have their original leases bought out by his company. He would also pay $3,300 in relocation costs.
Ravan wanted the transition to go smoothly, but soon it became clear that tenants, some of whom were living in the building, took the notices as a threat of eviction and refused to budge.
The situation grew heated last October when Ravan applied for permits to convert the building. As part of the process, city inspectors examined the structure and found people living in units - even though the building didn't have a certificate of occupancy and was zoned industrial. Ravan said he was told by inspectors that people couldn't live there.
Ultimately, 19 tenants opted to take the buyout and "had no issues whatsoever," Ravan said. "Many of them have even looked at plans to see if maybe they wanted to move back into it."
Paul Linkogle, who works as a prop master, rented space in the building for about four years and took the settlement. Linkogle, who admitted to living in the building at times, said the process went smoothly. "I was happy enough about it," he said. "I don't want to stand in the way of progress."
Eventually, every tenant moved out. Except one: Skyline Studios.
"[Ravan] represented this as a live-work space and that's what we came for," Stevenson said. "We have a valid lease that extends for another two years."
She refuses to sign the relocation agreement or move, instead staying even as demolition work continues. She said the dust and noise is an effort by management to force her out of the building.
"It's kind of like retaliation," she said. "It's harming our business."
While 308 E. Ninth St. is transforming live-work units into apartments, the more common conversion in housing-starved Southern California turns apartments into for-purchase residences. Egged on by creative lender financing and rock bottom interest rates, the changeover can mean big, immediate returns for property owners.
If it's any indication, one of the biggest Downtown real estate deals last year concerned Savoy, a 303-unit project at First and Alameda streets. It was developed by Trammell Crow Residential as apartments but, even before it opened, was re-envisioned as condos and put on the market. The building, which Trammell Crow officials in 2005 said would cost $65 million to develop, sold in January for $114 million.
Savoy was empty at the time. Rarely do changeovers go so smoothly.
Perhaps the most rancorous Downtown change in recent history (there are still people angry about the Victorian homes removed from Bunker Hill in the 1960s) came in 2004 when the residents of the 135-apartment Higgins Building at Main and Second streets were told they had to vacate within 60 days as the property was being converted to condominiums. The maneuver enraged some residents, and many left. At least five sued owner Barry Shy.
It was a similar scene at Little Tokyo Lofts after Hammer Ventures last year announced that 161 apartments would be turned into condominiums. Residents said they were not kept informed of the conversion specifics and schedule, and rumors spread that they would be kicked out. Fed up, many eventually moved.
For these reasons, residential conversions can be highly contentious, especially in places like Downtown, where the apartment vacancy rate is just 2%, said Dr. Delores Conway, director of the USC Casden Real Estate Economics Forecast.
"If the building is converted, there's not a lot of options," she said. "There are definite reasons the tenants would want to stay put."
Another twist with 308 E. Ninth St. is that the change would not force Stevenson to scramble to find a home. She says she does not live in the building, and that she owns a condominium nearby.
Instead, Stevenson says, it's a matter of principle. She argues that she and Gutierrez have spent a significant amount of time and money building out the existing space into a sample kitchen and bathroom to display their designs. Building management has yet to offer a comparable unit to the one she rents, said Stevenson, who is also demanding relocation fees and a refund for lost business.
"They say they would like to work with us but there hasn't been anything put on the table," she said.
Ravan said he has offered Stevenson and Gutierrez a number of spaces and even an apartment in the building once it is completed. They have refused all the offers, he said.
Yet Ravan also said that he is reconsidering the project. "We're still debating what we plan to do with the building. We may turn it into a hotel or something. We may tear it down. We may turn it all back into showrooms," he said.
Meanwhile, demolition of the building is underway, although construction has not started. The owner is on track to receive permits for the conversion, said Hamid Behdad, head of the city's adaptive reuse program.
While Ravan denied Stevenson and her studio are behind the delays, he did admit it is a difficult situation.
"Everything is up in the air," he said. "Right now, they pay their rent. We may just wait for their lease to be up before we do anything in the building."
Contact Chris Coates at chris@downtownnews.com.
page 1, 4/10/2006
© Los Angeles Downtown News. Reprinting items retrieved from the archives are for personal use only. They may not be reproduced or retransmitted without permission of the Los Angeles Downtown News. If you would like to redistribute anything from the Los Angeles Downtown News Archives, please call our permissions department at (213) 481-1448.
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