Buying into L.A.

Want to become an urban pioneer and buy one of the trendy converted lofts going up downtown?

You may have a wait. Downtown Los Angeles is on its way to becoming a rental market, with some 90% to 95% of new units set aside as rentals.

While developers and real estate experts predict the downtown residential market will eventually mature to become a mix of rental and for-sale properties, if you want to live in what is being called the "new" downtown, at least for now, you're going to have to rent.

Of the 8,000 housing units under construction, planned or proposed in downtown over the next few years -- many are loft conversions of historic buildings -- only three projects initially will be available for sale.

Why? Tax incentives for creating rental housing out of historic buildings, government subsidies for developing affordable rental housing and a skittishness by investors to bankroll a for-sale project in an unproven residential downtown, especially one that flat-lined during the recession of the 1990s.

And developers say they are choosing rental over purchase projects as a way to test Angelenos' commitment to the city's new urbanism. Will folks who normally don't venture east of La Cienega Boulevard pay rents downtown averaging $1,500 to $2,000 a month?

"First you have to prove that people are willing to pay that kind of money," said developer Tom Gilmore. "We had to prove the rental market was strong."

Gilmore, who recently converted three historic buildings in the city's core into rental loft units, thinks he's done that. The buildings -- the Continental, the Hellman and the San Fernando -- are part of a block of redevelopment Gilmore is undertaking known collectively as the Old Bank District bound by Main and Spring, 4th and 5th streets.

Based on full occupancy of those buildings -- some 230 units combined -- Gilmore now plans to convert the El Dorado Hotel on South Spring Street near 4th built in 1913, into 66 for-purchase loft-style condominiums.

"By the dozens," Gilmore said, tenants from the Old Bank District "are asking us to convert something to condos because they want to buy. The rental market is feeding the buying market."

Prices for the El Dorado condos will range from about $275,000 for a 1,000-square-foot unit to $450,000 for a high-end 1,500-square-foot unit, Gilmore said. The project will start construction late 2003 and will be ready for occupancy by mid-2004.