Adaptive Reuse Grows in Arts District

LOS ANGELES—The arts district is the current adaptive reuse hub in Downtown Los Angeles. M West Holdings recently sold a residential adaptive reuse property, the Newbury Lofts, to an unnamed buyer for $17.42 million. The property is one of the few residential adaptive reuse opportunities in the downtown neighborhood, where adaptive reuse tends to focus on retail and office properties. As a result, the sale received 20 offers from potential buyers.

“Newberry Lofts, which was once the primary warehouse for JR Newberry Co., once one of the top Grocers in Southern California, received its certificate of occupancy for live/work use under a previous “artist-in-residence” ordinance that promoted the conversion or redevelopment of existing light industrial for additional residential or work space for artists in the area,” Joseph Grabiec, a director at Institutional Property Advisors, tells GlobeSt.com. “The property had benefitted from a comprehensive renovation that included full system replacements and modern luxury interior & exterior upgrades similar to that of other residential adaptive reuse projects throughout downtown.” Grabiec represented the seller in the transaction along with his colleagues Greg Harris and Kevin Green.

M West Holdings bought the property in the first quarter of 2009, and felt that this was high time in the market to dispose of the property. The asset was fully marketed and received interest from a diverse range of buyers, including high net worth private investors, sponsored capital groups and institutional fund advisers. Built at the turn of the 19^th century, the property has 45 loft-style condo units with an average size of 1,308 square feet, which equates to a $387,000 per unit. That's a great price, considering that condos in the arts district are currently selling for $650,000.

While adaptive reuse has really helped to revitalize development in the downtown market, the trends in the arts district have been different from the rest of the market. “The density in the Arts District is distinguishably different from other parts of DTLA. Previous height limits and uses were conducive to lower density types such as industrial and flex office. Second, the adaptive reuse projects in the Arts District are focused on a broad range of different use types,” Green and Harris tell GlobeSt.com. “For instance the 300,000 SF Ford Motor Factory building was recently purchased by Shorenstein Properties this year and will be converted to office and retail to meet the demands of growing media and tech presence in the Arts District. The adaptive reuse focus is not as heavily concentrated on residential conversions.”