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LOS ANGELES, CA-Buyers planning condominium conversions or condo construction from the ground up have accounted for three-quarters of the dollar volume of deals closed by one of L.A.’s busiest multifamily brokerage teams in the past six months. Laurie Lustig-Bower of Team Lustig-Bower tells GlobeSt.com that condo developers who have acquired apartment buildings and other properties either for conversion or for ground-up construction have accounted for more than $152.2 million of the team’s $201 million in deals during that time.

Of that $152.2 million, Lustig-Bower tells GlobeSt.com, $100 million was for condos that will be built from the ground up and the rest was for conversions of apartments into condos. An example of the ground-up construction is a parcel at the House of Blues site in Hollywood that sold for $27.2 million, where the developer will build condos and underground parking on what is now a surface parking lot.

Lustig-Bower says the CBRE team, which has closed 19 deals in the past six months, is selling most of the properties to buyers who plan condominium projects. “What’s driving the market is condo prices, which have shot up tremendously in the past couple of years,” she says.

For example, condo prices on the Westside rose 25% in just the 18 months from the beginning of 2003 to the middle of 2004. They have continued to rise since then, which has encouraged more and more multifamily investors to go the condo route.

The pace of condo deals accelerated this year in Los Angeles County after getting its Southern California start in San Diego County a couple of years ago and then moving up into Orange County. “It was probably the beginning of this year before we saw a lot of condo conversion deals on the market in L.A.,” Lustig-Bower says.

As more buyers began looking for condo conversion and construction sites, more sellers began to ask if their properties were good candidates for condos, she notes. The best candidates for conversion, which are rare, are buildings that have a full condo map recorded for them. “Those are like gold,” Lustig-Bower says.

If a building doesn’t have a condo map recorded, the question is whether it is built to condo standards, including the extra parking required for condominiums. “Some of them can’t be converted because they just don’t meet condo requirements,” Lustig-Bower notes.

In the case of ground-up construction, some of the best sites are those with vacant land or parking lots that can accommodate both the condos and additional parking. Besides the House of Blues site, another such project is at 5500-5520 Wilshire Blvd., where a surface parking lot will be converted to condos and below-grade parking.

A Santa Monica property that Team Lustig-Bower just took to market at an asking price of $30 million has a surface parking lot that would accommodate “37 good-sized condos” in addition to subterranean parking, Lustig-Bower says. “We priced it just as an apartment building, and we figured that the development potential would just be icing on the cake” for prospective buyers, she says.

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