Inside the Residential Frenzy
Publish Date: 03/10/2005
Inside the Residential Frenzy
Housing Events Show the Hunger and Hype for Downtown Living
by Kathryn Maese
At first glance, the event on the evening of Thursday, Feb. 24, looked like any swanky loft party. A bartender kept the champagne flowing, a DJ kept the tunes spinning and servers kept the salmon pinwheels and beef satay circulating. In the sleek, dark wood kitchen with bamboo floors, guests chatted excitedly. Others reclined on low suede chairs in front of oversized plasma televisions and a Frank Gehry-designed coffee table.
Edwin and Jeannie Wong, who reserved a condo at Elleven, were among the 150 people who showed up to meet their neighbors at the opening of the project's sales office. The building won't be finished until 2006. Photo by Gary Leonard.
The biggest hints that something different was at play were a scale model of two high-rise buildings and a wall display of wood finishes, granite countertops and flooring.
Yet those elements were key, because rather than being a gathering of old friends, the party was pure business, organized to kick off the new 4,300-square-foot sales office for the South project, a collection of three condominium towers planned for the block at 11th Street and Grand Avenue. Most of the attendees were people who had already reserved units in the sold-out first phase, dubbed Elleven and set for completion in March 2006.
So, long before it opens, there were 150 people who will soon be neighbors. By scanning the room one could see the face of Downtown's new residents: a married couple buying their first home, roommates splitting a mortgage, a family with three kids and a fourth on the way, and an investor looking to make a bundle on the growth of South Park.
The 181-unit Elleven, which sold out in a matter of days after going on the market last November, reflects two emerging worlds in Downtown residential real estate: those who are in and those who want in.
The latter was reflected two days later at the Downtown Open House, organized by the Downtown Center Business Improvement District (DCBID). There, hopeful buyers and renters, as well as the merely curious, got an up close look at urban living in about a dozen new residential projects. While many were testing the housing waters, others were ready to pounce.
"I don't care what we have to do to get in, but we have to buy one of these lofts," a woman yelled into her cell phone as a tour bus meandered through dense traffic on Broadway.
Easier said than done - especially with 7,200 people showing up to sign overburdened interest lists and offering checks on the spot to buy condos that, in most cases, are nothing more than steel and concrete caverns.
Surprising the Boosters
Though the creation of thousands of units of housing, along with the arrival of cultural venues and a host of civic projects, have begun to change perceptions that Downtown is a limited urban core with few amenities, the massive crowds that sought a glimpse of life at the Feb. 26-27 open house surprised even the staunchest boosters.
"I know how great Downtown is, I know the product we're showing is something you can't get nearly anywhere else, but we're gratified to know that the message we've been sending out for eight years has finally taken root," said Carol Schatz, president and chief executive of the Central City Association and DCBID.
South Group executives were equally enthusiastic with their event. Tom Cody, a principal at Gerdlin/Edlen Development Company, one of the two Oregon-based entities developing the project, said the function was aimed at building the Downtown community.
"The people who are adopting this lifestyle have a vision for what Downtown can be," Cody said. "They are part of a family."
What the events - and their aftermath - make clear is that the hunger for Downtown living is more than hype (though there is a fair amount of that too). At the Gas Company Lofts, for example, about 5,000 people traipsed through two furnished units, one a sophisticated design with cork floors, Eames chairs and stainless steel appliances, the other a contemporary vision in all white with mod shag rugs and killer views. Building General Manager Nejdeh Avedian said his office received dozens of follow-up calls from tour participants last week. He expects to fill as many as 30 lofts by mid-April.
"There were a lot of couples and investors coming through to take a look at Downtown and determine whether this is where they want to put their money," he said. "What surprised me was that a lot more people were interested in purchase than rental."
Avedian said the project's co-developer, the Lee Group, which is undertaking a second phase that includes condos atop a Ralphs supermarket at Ninth and Flower streets - scheduled to open in late 2006 - received 3,500 requests to buy into the project.
Gabriel Rossman and Nicole Esparza, who flew in from New Jersey for the open house, are among the throngs who want to buy. Though Rossman has been offered a job in West Los Angeles, the couple, in their 20s, said they are set on living Downtown.
"We're interested in the 1100 Wilshire Building," said Esparza. "The project is really different from everything else."
Apparently, 1,000 people who signed interest cards thought so too, despite the fact that the units were marked only with masking tape to indicate their size and layout. The building, where the selling points include views that stretch as far as Catalina on clear days, are to be turned into 230 condos by May 2006.
Meet the Possible Neighbors
Perhaps the most interesting element of the two events was the variety of people who attended. A recent survey of residents in new Downtown buildings found that many of them are between the ages of 23 and 34, and live alone. Nearly 20% came to Downtown from outside of California, and the median household income is a healthy $90,000.
A fair number of people who showed up at the events fit the demographic. Tim Grant, a 30-something City Hall webmaster, attended the open house to get a feel for his soon-to-be neighborhood - he is in escrow for a loft condo at the Bartlett Building at 215 W. Seventh St.
Others, like Edwin Wong and his wife Jeannie, who mingled at the Elleven party, have already had a brush with Downtown living. Wong said they are selling their one-bedroom condominium at the much-touted Flower Street Lofts, the first for-sale project in a rehabbed building, that helped kick off the current condo boom. "We like Elleven because the units are bigger and we're looking to expand," he said. "The neighborhood is great and there is so much energy here."
Those looking for homes have an interest in numerous neighborhoods. The open house resulted in 14 lease signings at the Pacific Electric Lofts in the Historic Core, and the Santa Fe Lofts across the street at Sixth and Main inked 12 leases. In the Fashion District the Santee Court Lofts, which is beginning work on its second phase that will include condos, lured 2,500 people to its model unit. At Grand Lofts and 801 Grand near South Park, both condo projects under construction, more than 1,500 attendees filled out interest cards.
The frenzied pace is unexpected, particularly with recent reports by some real estate experts that overall housing sales are slowing and prices are mellowing from astronomical highs. Downtown seems to be immune from those forecasts, however, with activity akin to last spring's rush that saw multiple bids for each property of $30,000 to $100,000 over asking price. Even with interest rates expected to creep up over the next year, the pace Downtown has yet to flag.
Back at the opening of the Elleven sales office, soon-to-be buyers seemed unfazed that they will have to wait until 2006 to move in, and that rate hikes could potentially price some out of the market entirely.
"I'm banking on the fact that this will be a 24-hour city," said Darren Green, who reserved a two-bedroom loft on the seventh floor and is enlisting the help of a few friends to shoulder the mortgage. "Plus I really love the diversity of the people here."
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