DAVID KEAN & ASSOCIATES
In the Media

Source:  The Hollywood Reporter, February 2014

http://www.hollywoodreporter.com/news/harrison-fords-son-willard-lists-678343

Source:  Variety, April 2014

https://variety.com/2014/scene/news/kim-sing-theatre-hits-the-market-for-4-5-million-1201154471/

Cocktails with Kobe Bryant, outdoor buffets on terraces bigger than most homes, upscale gift bags, world-famous art, and an 8-foot bar made of ice are just some of the extravagant things you might encounter at a luxury home open house these days.

It's enough to make your head spin, if not your wallet.

Back when the housing market was thriving, real estate agents could sell almost any home by simply putting a "For Sale" sign in the front yard, rearranging some of the furniture and having cookies baking in the oven during an open house.

However, open houses are a lot different nowadays, especially for the rich, who not only want to tour the house, but also want to get a sense of how the home will look and feel when they're entertaining guests.

"When you have a unique space, many people who come in do not have the vision of 'what can I do with this space?'" says Thomas Guss, president of New York Residence, the sales and marketing agency at The Centurion, a condominium complex in Manhattan where units sell for up to $39 million.

To showcase the double-high ceilings on a $6.5 million apartment, Guss turned it into an art gallery with artwork that had been shown at the Royal Academy of Arts in London. For the 1,500-square-foot apartment -- which had an outdoor terrace larger than the indoors -- Guss had an open house with an ice bar, heat lamps, hot chocolate and cocktails to highlight the terrace and to "paint a picture" of how the home could be used for entertaining.

"You have to show people what you can use the terrace for," he says. A $3.5 million offer was made after the event, but the seller is trying to get the $3.8 million asking price, Guss says.

Home sales and celebrity star power

In April, Cap Equity Realty in Los Angeles is hosting a private party and home tour for investors from China at a Hollywood Hills home where they'll get to meet Los Angeles Lakers star Kobe Bryant. The party will include an outdoor buffet on a terrace overlooking the Hollywood Hills, complete with sponsors who are giving away upscale gift bags, says Jason Jones, vice president of operations for the real estate company.

At an upcoming open house for a home in Moorpark, Calif., Jones plans on highlighting the home's 5 acres of 500 avocado trees with a chef making avocado-inspired dishes. The home listed for $1.6 million in September 2011 but is now selling for $1.5 million.

Because the site is a little remote, Jones expects about 50 attendees. Without the big event -- which will include a raffle for car detailing and other prizes -- Jones says he'd expect maybe only a dozen people to show up.

"It's best to do that at your initial launch," Jones says of making a big splash with a big party and prizes. "You're going to get the most bang for your buck after the initial listing."

Another Hollywood Hills real estate agent, David Kean, says that he went nostalgic in one upscale neighborhood to attract buyers. Kean filled an ice chest with soda brands from the 1950s and says it was a hit with both kids and parents who hadn't tasted the sodas in decades.

The biggest prizes are for brokers

New York real estate agent Edward Longley, founder of The Hollingsworth Group, is offering attendees at one open house the chance to win an iPod, iPhone or carriage ride through Central Park.

However, the bigger prizes are reserved for the brokers who bring in successful buyers. Longley says he hasn't yet given a convertible BMW to a broker of a client who buys a $12 million home from him, but he's planning on doing so. (Gifts to brokers are only given after a sale is complete, he says.)

Of course, all this might not be needed if the economy were better, although thinking outside of the box is always welcomed in selling luxury real estate, says Jones.

"You have to go out and find your buyer," he says. "You can't just hang a sign anymore."

In less than 11 years, Downtown Los Angeles has gone from desolate and dreary to hip, hot, and happening. Years ago, at five p.m., sidewalks would basically roll up and the area shut down. Now, a mixture of residents walking their dogs, convention guests, and patrons sampling chic new restaurants or nightclubs can be seen at all hours.

The transformation seemingly took place overnight, but years of planning have made Downtown LA one of the region's most talked-about spots.

Since 1999, over $15 billion in private sector investment has poured into the area, helping to create a vibrant and diverse community appealing to both businesses and residents. The primary catalyst for the resurgence of residential development was the city's implementation of the Adaptive Reuse Ordinance. The ordinance offered developers tax incentives, expedited permit approval processes, and adjusted zoning and code requirements. This made it possible to convert historic and economically obsolete buildings into residential, mixed-use projects, many of them loft-style condominium complexes with added amenities like pools, spas, gyms, and screening rooms.

At the same time, commercial development was spurred by the opening of AEG's Staples Center, which drew national attention to downtown by hosting the Lakers, Kings, and major entertainment events. Concurrently, luxury apartment communities were built by G.H. Palmer, the first developer in decades to offer upscale living in downtown. The boom culminated in 2007 with the opening of the area's first supermarket in 57 years and LA Live in 2008, with its multiple concert venues, movie theaters, restaurants, nightclubs, and hotels, including the Marriott and Ritz-Carlton. With the plethora of new entertainment possibilities within proximity of the Convention Center, LA was able to compete for national conventions.

The economic downturn negatively impacted development, but by then, a critical mass had been established. Downtown residents numbered approximately 43,000, compared to 18,700 in 1999. The false start that happened in the late 1980s was thus avoided.

As a result of overzealous, late-to-the-game condo investors and residential projects that had the misfortune of opening after the real estate bubble popped, a favorable buying environment now exists. Current residential buyers include investors (foreign and domestic), as well as empty-nesters, first-time homeowners, second-home buyers, and parents buying lofts for their children in lieu of student housing. All are looking for remarkable deals, and there are plenty of bargains to be had.

Despite being a major business hub, Downtown actually has a small-town feel. Several residential developments have wine and book clubs, yoga groups, and weekend pub crawls. It's not uncommon to strike up a conversation with a stranger at the supermarket or dry cleaners. Downtown consists of 15 tight-knit micro-communities. Each neighborhood has its own distinct flavor and demographic.

Three of the largest residential hubs are South Park, The Historic Core, and The Arts District.

South Park, home to the Staples Center and easily accessible to USC, is the most developed section, featuring mostly newly built, loft-style, high-rise developments, with a handful of buildings converted into lofts. The Historic Core, with its art galleries and boutiques, is the most like San Francisco and New York in architecture and energy. The majority of living options are converted historic buildings. The Arts District was created by artists for artists, and offers larger, raw spaces in converted industrial buildings and warehouses.

In general, prices have dropped from a high of $576 per square foot in 2006 to approximately $357. Recent sales activity (according the Multiple Listing Service) shows lofts selling from $85,000 to $2,150,000 for a penthouse. The median price is $330,000. One bedroom unit sales are surpassing two bedrooms by a 6 to 1 ratio.

The expansion of the residential and hospitality sectors have created a foundation for the growth of the retail market. An area to watch is the 7th Street corridor. Once the hub of Los Angeles shopping, 7th Street is located within walking distance of thousands of hotel rooms, mass transit, and the heart of the financial district.

Hal Bastian, Senior Vice President and Director of Economic Development of the Downtown Center Business Improvement District, is spearheading the 7th Street Retail Recruitment Initiative and has been directly involved with the opening of dozens of new downtown businesses. The initiative is a five-year plan to bring independent retailers to 7th Street.

According to Mr. Bastian, the goal is "to create a unique retail environment that is different than any other place in Southern California." Select soft goods retailers are being recruited from the Abbot Kinney, Melrose Avenue, and Ventura Boulevard shopping districts. Mr. Bastian advises, "When contemplating opening a business in downtown Los Angeles, it's important to have capital for building out the store and a marketing budget. It's not enough just to open your doors. You actually have to go and market and create interest in whatever it is that you are selling."

With many major projects in the pipeline, such as the recently announced Eli Broad Art Museum on Bunker Hill and the one billion dollar rebuild of the Wilshire Grand Hotel, the community remains poised for future investment and expansion. While Downtown has always been a legal, banking, and cultural hub, the residential population base continues to grow and evolve, creating new needs in the marketplace for core and supporting businesses. These signs of continued growth promise to keep Downtown on the forefront of urban economic renewal.

Can't We All Get Along?
As Downtown Evolves, There Is a Disturbing Divide Among Residents
by David Kean

DOWNTOWN LOS ANGELES - It seems that nowadays many Down-towners think their neighborhood is the only good place to live in Downtown Los Angeles. Where has this attitude come from? Is it dividing us?

As Downtown has evolved into a residential area, it has created several micro-neighborhoods. Each community has a distinct flavor and residential demographic mix.

Many outsiders assume that living Downtown means living in an artsy, industrial loft. But the transformation of old office buildings and the creation of luxury highrises with private screening rooms and gyms has brought a whole new group of homeowners and renters. The intermingling of Lamborghinis and Bentleys with Priuses and Smart Cars is a common sight in many Downtown residential garages.

Thus a rivalry has begun, with some feeling "my neighborhood is better than yours." You hear comments like, "City West is not really Downtown," "South Park is the Beverly Hills of Downtown" and "the Historic Core is the real Downtown."

What happened to the camaraderie of all Downtowners? When did the pretentiousness and insecurities we all sought to escape track us down?

Most Downtown residents select the neighborhood and building that best fits their needs. Some people like ultra-modern architecture, others industrial. Some residents don't feel that they are living in an urban environment unless they see someone urinating on the sidewalk or can buy fake Prada sunglasses down the street. Others insist on sparkling landscaped sidewalks with at least three Starbucks within walking distance. Are any of these views wrong?

I've solicited anonymous opinions from Downtown residents in several communities to learn what Downtowners really think of their neighborhoods.

South Park: Viewed by many as the most "gentrified" area of Downtown, it was once known as "that area way down near the Transamerica Building," but is now the center of the entertainment corridor. Residents include professionals, hipsters and students who are drawn to Staples, L.A. Live and restaurants, as well as the soft-loft, high-rise lifestyle. "I chose to live here just because of its proximity to the new Ralphs and because the buildings are brand new and really top of the line." Many residents see it as the "most probable neighborhood to realistically be able to raise a family in Downtown L.A. in the coming years."

On the flipside, some see it as too homogenized. "South Park is too sterile, too cold. It's not living up to the hype and a lot of residents are feeling a little sore over that. It should've grown organically." Some view the residents as more suburban-minded than urban.

City West: The home to many corporate professionals and entrepreneurs who are drawn to its easy freeway access and lack of hustle and bustle is a quiet neighborhood that escapes the commute time gridlock. It's close to everything, yet out of the loop. One homeowner describes it as "Upper-East-side-esque, the true quiet neighborhood in Downtown just outside of all the action."
Others see it as dull and lifeless, the "New Jersey of Downtown," since it's across the bridge. "Good bones, but it'll always be 'Downtown support' because of the freeway. There's no center for the neighborhood. Right now, it's just a conduit to the Financial District."

Historic Core: Believed by many to be the "real Downtown," the neighborhood is the most like San Francisco and New York in architecture and energy. Residents are as varied as the mix of businesses on the street. It seems to be the area where you are most likely to have a doctor, an artist and a CEO all living in the same building.

Recurring concerns include the homeless, the lack of street parking and congestion during the day. "Not for the fainthearted or weak stomached."

Fashion District: The neighborhood offers an eclectic mix of architecture. People who live in the Fashion District want to be in the middle of the action. Non-residents see it as a "bargain haven. Crowded. Mix of boring and intriguing at the same time." It's a highly charged creative environment. "The Fashion District is awesome - packed with people during the daytime. Los Angeles Street south of Seventh is unexpectedly charming."

But this is not an area for the agoraphobic. Transients and parking are frequent complaints, as is the fact that after 7 p.m. the sidewalks seem to roll up. Additionally, many think this commercial center is too rough around the edges. "The streets aren't as clean, the people aren't as clean."

Arts District: Although some new upscale housing complexes have opened here, many people still think of the large, raw spaces in converted industrial buildings and warehouses that draw those who require a lot of space in order to create. A local describes the area as "quiet, more laid-back than the rest of Downtown." A longtime area resident says, "I live here because it is like living in a shire or Mayberry.... People you don't even know will say hello as they pass you on the street."

However, it's an area that many Down-town dwellers have not explored. Some feel it's too desolate. "The Arts District has some cool places to eat, and there are probably plenty of cool little places to go that are worthwhile, but not enough to gamble on living there."

Is one neighborhood really better than another? It all comes down to personal preference. Downtown's diversity and variety is a positive feature that should be respected, embraced and explored. We should all make a point to get out of our corner of the city, see the sights and discover the wonders in our neighbors' backyards. Maybe we shouldn't judge these diverse areas, but recognize that their differences are what make Downtown "Downtown."

THE STATE
Grocery store returns to a revitalized downtown neighborhood
By Cara Mia DiMassa, Times Staff Writer
July 19, 2007

South Park Renaissance
Ralphs Grocery got its start in downtown Los Angeles during the horse-and-buggy days. But the supermarket abandoned the city center in 1950, a symbol of the district's rapid decline in the wake of the post-World War II suburban boom.

Now, Ralphs is poised to return to the heart of the city, with a 50,000-square-foot market in the shadow of Staples Center and more than a dozen new condo towers. It is scheduled to open Friday.

The supermarket is a central part of a concerted effort by developers and urban planners to create suburban touches in one corner of downtown, an area known as South Park.

Much of downtown's renaissance so far has been focused on the rehab of buildings in the pre-World War II commercial core, where dozens of once-dilapidated office buildings have been converted into luxury lofts. Residents prize century-old brick facades and lovingly restored grand lobbies — and tolerate the sometimes grimy streets that come with them.

But just a mile away, South Park feels different.

Sparkling new steel-and-glass high rises are sprouting on the sites of former parking lots, auto dealerships and warehouses.

Developers and city officials have planned wide sidewalks and double rows of street trees, as well as pocket parks in the middle of city blocks. There's even a light-rail platform a short walk away.

This strategy has helped developers attract to South Park businesses that are more often seen in suburbia: a Cold Stone Creamery that is going in next to the Ralphs; a Starbucks at 11th Street and Grand Avenue; and bistros, markets, nail salons and other amenities to serve the well-heeled neighborhood residents.

In addition, the first phase of LA Live, a 4-million-square-foot "sports and entertainment hub," is expected to open in September. That development will include chain restaurants such as P.F. Chang's, as well as a 14-screen multiplex.

"This is a modern neighborhood," said Cynthia Heimbold, a furniture designer who moved to South Park six months ago from the historic district. "This is new construction. It's cleaner … and I knew it was going to grow a lot quicker than the historic core, because they were starting from scratch."

Heimbold has opened a furniture store on the ground floor of her building, the Elleven, to cater in part to the growing number of residents in the area. "It feels like we are on the forefront of something really cool that's happening," she said.

The push to integrate suburban touches into urban settings has become a cornerstone of some downtown redevelopments. Cities like San Diego; Portland, Ore.; and Vancouver, Canada ; have pushed for designs and amenities that foster safe and livable city centers.

"If you are a developer today and you are building in an area like that, if you don't think about the street-scaping and the neighborhood, you are nuts," said John McIlwain, a senior fellow at the Urban Land Institute, a land-use planning think tank. "People are buying not just an apartment but a neighborhood. Everything within a quarter mile, a five-minute walk, is as important as the countertops in their kitchens. It's an extension of their environment."

Realtor David Kean, who has represented buyers, sellers and renters of South Park units, said he finds that the upscale nature of the neighborhood appeals to many would-be residents.

"A lot of people want an area that's less fringey," Kean said. "They are willing to pay more to buy into an area that is already established and has stuff to do and restaurants nearby."

Still, some question whether the area will have the kind of urban fabric necessary to sustain it as a neighborhood over the long term — especially because housing prices in the area prevent many from moving in.

"It might look quite sanitized and manufactured. It's certainly not authentic. But at the same time, it's marketable," said Anastasia Loukaitou-Sideris, chairwoman of the Department of Urban Planning at UCLA. "Is it a neighborhood in the old sense of the word, where you know your neighbors and can borrow a bottle of milk from them? No, probably not. That doesn't come simply through design and wider sidewalks."

In South Park, more than 3,500 residential units have gone on the market so far, and about 5,400 more are planned to become available over the next three years or so.

If all of those units are built, that would mean that almost a quarter of residential units in downtown would be in South Park, according to the Downtown L.A. Business Improvement District.

Although most of the new developments have risen on former parking lots, there have been concerns from some housing advocates that downtown's upscale housing could move farther south, potentially pricing out low-income residents who have long called the area home.

For Heimbold, the reasons for moving to South Park were simple. She said she wanted "to be in an area I knew, a place that you knew was growing quickly, and would go up in value."

Rents at the Met Lofts, which developers describe as a boutique residence inspired by Bauhaus design, range from about $1,670 a month for a 687-square-foot space to about $4,500 for a 1,464-square-foot loft.

Most new South Park units, though, are condos, with prices starting around $500,000 and climbing steeply from there. "Not rebuilt. Not redesigned. Not re-anything," brags a website for Luma, one of the buildings by a consortium of Portland-based developers known as the South Group that has been at the forefront of the neighborhood's transformation.

When Jennifer Girsky and her husband, Marc, first decided to move into the area about four years ago, the entire neighborhood was still in the planning stages, and the building they had chosen was just a hole in the ground.

But Girsky said that when the couple saw plans for South Park, they loved the sparkling newness of the buildings and felt it was something vastly different for downtown. "Instead of looking old and urban, it's new and urban," said Girsky, a corporate flower designer.

The couple, in their 30s, live with their Maltese dog in a spacious 12th-floor unit with two bedrooms and floor-to-ceiling windows in Elleven, a 176-unit structure at 11th and Grand that is L.A.'s first residential high rise in 20 years.

The grand scale of South Park's transformation is due in large part to an abundance of available land, much of it amassed by the AEG Group, the firm owned by billionaire Philip Anschutz that also controls Staples Center.

"They had a dream, and they had Mr. Anschutz's money," said Jeff Lee of Lee Homes, which has four projects in the area, including one on land acquired from AEG. "They never gave up, and I am so glad we believed in their dream."

A big part of that dream involves a supermarket. When the downtown residential boom began, many of the new residents complained about the lack of a major supermarket in the city center. Many residents drive several miles away to stock up on groceries.

The opening of the Ralphs Fresh Fare is considered a symbolic boost for downtown — the latest sign that big retailers believe the downtown loft and condo community is strong enough to support their stores. Boosters hope that if Ralphs succeeds, other retailers will follow.
—
The first phase of LA Live, with more chain stores, will open in the fall. Both projects have been eagerly anticipated and could dramatically increase the amount of car and foot traffic in the area.

But others cite a third wave of proposed development, what Lee refers to as "the tower wave," as South Park's ultimate test. (Most of the new residential buildings in South Park today are in the 10- to 15-story range.)

Developer Richard Meruelo has begun construction on a 36-story building at 9th and Flower streets. The four phases of the Metropolis project, a mixed-use complex just east of the 110 Freeway, will each include a tower that is more than 30 stories.

And the Titan Organization Inc. plans to break ground early next year on twin towers at Grand Avenue and Olympic Boulevard — the design of which has led some downtown watchers to nickname them the "Grand Tetons" of downtown.

The plans, indeed, are grandiose. And several of the larger projects have fallen behind schedule. But as land costs in the area continue to rise, "the clock," Lee said, "is ticking."

--mailto:--cara.dimassa@latimes.com

Rental Reduction
With Rising Inventory and Flattening Rates, the Downtown Apartment Market Faces a Challenge - Edited
by Anna Scott

This month, the first residents began moving into the recently renovated Mandel Lofts, a four-story, burnished brick edifice wrapping around the corner of Seventh and Olive streets. Half a mile away on Broadway, the Judson C. Rives building waits in anticipation, the first tenants for its 60 units expected within weeks. Meanwhile, overlooking Pershing Square, the Title Guarantee building was slated to begin move-ins for its 74 apartments last week.

These are just three of the approximately 10 long-planned rental buildings slated to open Downtown this year. But as the developers get set to debut their multi-million dollar apartment complexes, they are suddenly encountering more competition than many expected.

The Downtown Los Angeles rental market has hit a storm that, if not perfect, is certainly jarring to many. Along with the expected slate of apartments, would-be renters now enjoy a wider choice from condominium developers suddenly fearful of being able to sell units for $400,000 or more during a credit crunch. Then comes a slew of other units created by a "shadow market," as investors who purchased condominiums several years ago strive mightily to rent them out.

In short, supply seems to have finally caught up with demand in Downtown's rental market. The trend, say experts, is likely to continue.

"Downtown two years ago was one of the tightest markets around," said Dolores Conway, director of USC's Casden Real Estate Economics Forecast. "You could find something to buy, but not to rent, because of the huge housing boom. Then the market changed. We have seen a steady decline in occupancy in 2007."

The dip has been largely spurred by the subprime mortgage crisis, which has thrown the entire housing market into a tailspin. That, combined with the fact that Downtown rents have risen in recent years, has prompted some developers to turn their condominium efforts into rentals in the effort to keep the cash flowing. The speculation is that many will seek to ride out the storm and, when the market rebounds, convert the apartments to condos.

Staying competitive amid the growing number of rental units poses a challenge to Downtown developers. Experts say those looking for apartments in the community will likely see rents flatten or even drop over the next year.

"There's a lot of choice Downtown," said David Kean, a broker with Prudential California Realty who represents properties Downtown and on the Westside. "People are going to have to step up to the plate and offer more amenities, offer a month's free rent. I think there will be a glut - but there already is a glut."

A Crowded Landscape
With the opening of new restaurants and nightspots, Ralphs supermarket and the Nokia Theatre, demand for Downtown housing steadily grew in recent years. Along with the oft-reported soaring condo sales, developers were enjoying a tight rental market.

Rents in the area encompassing Downtown and neighborhoods east to the 5 Freeway, west to Hoover Street and south to Washington Boulevard currently average approximately $2,068 for a two-bedroom apartment, or $2.08 per square foot, said Conway.

The Downtown core has been on the higher end of the scale. The Related Cos.' Hikari apartment complex in Little Tokyo opened in late 2006 with many units going for more than $3 per square foot - or nearly $3,000 for a two-bedroom residence. At the recently opened Orsini II in City West, two-bedroom units start at $2,200.

Soon, renters could find themselves with a lot more choice. Upcoming rental projects that were previously planned as condominiums include two buildings by SB Lofts developer Barry Shy with a total of more than 400 units, both expected to open within a year; the Amidi Real Estate Group's $50 million, adaptive reuse high-rise Ten Ten Wilshire in City West, opening next month and bringing 227 units available for short- or long-term lease; and the 118-unit Arts District building Artisan on Second from Trammell Crow Residential, scheduled to open by the end of this month.

"The market always helps to dictate" whether a project will debut as rental or condominium units, said Michael Bustamante, a spokesman for Meruelo Maddux Properties, developer of the 92-unit rental building Union Lofts in the Jewelry District, to open imminently. "We built our project with flexibility in mind so we'd be able to adapt to market conditions, and that's what we've done." Between October 2006 and September 2007, 1,300 rental units came online in the Downtown area, said Conway. In approximately the same period, occupancy dropped from 97.8% to 96%.

Although that does not sound like a steep fall, in rental terms the change is significant, Conway said. Previously one of L.A.'s tightest markets, Downtown now has a higher vacancy rate than Hollywood, the South Bay and the San Gabriel and San Fernando valleys.

Condominiums put on the rental market by investors who bought hoping to resell the units in the near future for a hefty profit have further diluted the rental market.
"We don't really have a way of measuring that, but we do know it's occurring," said Conway. "What it's doing is contributing a shadow supply to the market."

Condominiums available for lease last week on craigslist.com included units at the Packard Lofts near Staples Center, the Toy Factory Lofts in the Arts District, Market Lofts above Ralphs on Ninth Street, Elleven in South Park and the Eastern Columbia Building on Broadway. Including studio, one- and two-bedroom units, prices started as low as $1.60 per square foot and averaged just over $2 per square foot.

Holding Steady

Faced with a saturated rental market and the wild card of for-lease condominiums, some developers plan to lower prices in their upcoming projects.

"We've anticipated this all along," said David Gray of 424 Broadway LLP. The developer and architect of the soon-to-open Judson building, as well as several other projects, added, "Everyone knew that there was a problem in the residential real estate market."
Others say that despite the increased supply, the appetite for Downtown living remains strong enough to support current - if not increased - rents.

"I think there's a tremendous demand Downtown," said Kim Paperin, a managing director at Trammell Crow Residential. Rents at the company's Artisan on Second start at $2,000 for a one-bedroom apartment. "I think we're all going to do well."

Of the company's decision to shift from for-sale to rental units about a year ago, once construction had begun, she said, "The housing market certainly did have something to do with it, but we also saw a strong demand for rental housing."

Owners of existing rental buildings also say that they have not felt pressure to drop prices.

"Things are getting competitive, but between all my buildings I'm very satisfied," said Izek Shomof, who owns the Milano Lofts on Sixth Street and Grand Avenue, along with several buildings on Spring Street. Occupancy at his buildings ranges from about 97% to 100%, he said, and he has increased rents for some units in the past year.

Conway predicts that while the growth of Downtown's rental market will continue at a similar pace through 2008, rents will likely stabilize.

"Because we have a weaker economy, landlords will not have the strong demand that will allow them to raise the rents substantially," she said. At the same time, "the area's still very desirable to live in. Our best estimate is that rents will be close to what they are."
However, she added, the job market adds a layer of unpredictability. If unemployment ticks up, then demand will soften for everything.

One trend Conway expects to intensify in the next year is developers putting projects on hold as they wait to see how the housing market pans out.

Yuval Bar-Zemer of Linear City, developer of the Toy Factory and Biscuit Company lofts in the Arts District, agreed. His next project, a condominium complex called the Mill Street Lofts, was expected to break ground early this year but has been delayed for at least nine months because of the current housing market. He has not considered converting the project to rentals, he said.

"The cost of construction is so high, it's very hard to make the numbers work," said Bar-Zemer. "I think most of the projects that convert to rental have already broken ground; they can't stop the process and they decided to fill the time gap in the slow market."
Conway said she expects to see a full recovery in Downtown's housing market in three to five years, both in the for-sale and rental sectors.

"Downtown is still vibrant," she said. "L.A. Live will be coming online soon; there's the Nokia Theatre, Disney Hall, the Cathedral. There is a large demographic trend of young professionals and some retired Baby Boomers. Long term, I actually think things are going to be fine.

"But," she added, "it's hard to predict what's happening, because everything is in flux." 

The Realtor Buddies
In the New Downtown Market, A Group of Realtors Sticks Together - Edited
by Kathleen Nye Flynn
On the fourth floor of the Higgins Building, two Realtors represent competing firms, contend for the same clients and search out the same Downtown lofts and condos to sell.
Despite this race for business and the thousands of dollars in commissions they yield, the two share an office. They overhear each other's conversations. Sometimes, they pass around their customers.

According to a core group of local players, that's par for the course in the Downtown Los Angeles market. In a city that has always churned around real estate, where the market is hot (or not) and agents vie for the next big sale, the still-new frontier of Downtown residential property has forced its niche of realtors into an unusual camaraderie.

With Downtown newly added as its own area to the Multiple Listing Service (a database that details where properties are for sale), and the first big-name realty company opening its doors to service Downtown primarily, the agents - which have doubled in numbers in the last few years - see themselves as the experts, the pioneers who sell not just by pitch, but by personal experience.

The community of more than a dozen agents who live, work and invest in Downtown is tight knit: They blast out emails to each other sharing news, link to each other's websites and, at Downtown parties and events, they say they can be found in a cluster talking shop. Ask any one of them who his or her peers are and it is always the same set of names.

Friendlier Than New York
Those active in the field say that Downtown's cluster of realtors is unique for its partnership. By contrast, Manhattan is known for realtors who stake out territories, steal clients and belong to big-name firms, said David Kean, a local realtor. In effect, Downtown looks like small-town living.

The fact that the number of Downtown-specific realtors is growing is not surprising in a market where thousands of units have come online in recent years, and where condominiums routinely sell for $400,000 to $800,000. In response to the activity, Re/Max earlier this year became the first major brokerage firm to open a residential realty office in Downtown. It brought five new agents to primarily service the lofts and condos in the area.

But, agents say, even though more units than ever are available, the market is slowing down. Some expect the less-committed agents will move on to faster-selling pastures, if they can find them.

Despite the close relationships, it's not all about friendship. Kean, who lives in Downtown but works throughout Los Angeles, said that there is a fair amount of competition - and grievances. For instance, he gives less credit to agents who only own property in Downtown but don't live in the community. Other irritants are the agents who guide clients toward the highest commission.

Knowing the Market
A lot of handholding is needed for people interested in moving Downtown, agents say. Realtors have to know answers to what, in other areas, would be excessive questions.

For instance, each realtor has his or her own reply to the ever-popular question of where does one get groceries in Downtown?

There are other tidbits of information that the agents say only comes from having experience in Downtown and that will make or break a client's decision to sign on. For example, Kean said he not only keeps up with local politics, but follows activities around Skid Row, which many clients ask about. He even suggests that his customers go on the organized monthly walks around the neighborhood.

"You have to be savvy, working in Downtown," Kean said. "If you aren't a good agent, you aren't going to survive here. You have to be an expert. The ones who aren't, don't last."

Kathleen Nye Flynn can be reached at kathleen@downtownnews.com

page 1, 8/28/2006
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