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.
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.