DOWNTOWN LOS ANGELES - In the column “What’s for Sale,” Los Angeles Downtown News looks at everything from condominiums to multi-family buildings to vacant lots now on the market. We hope that regular snapshots of individual properties will make for a wide-ranging survey of the overall state of Downtown real estate.
This week, the focus is on a building that sits on approximately three-fifths or an acre in Skid Row. The list price is $6.3 million.
The Property: The owners of the 119,556- square-foot edifice at 421 E. Sixth St. are looking to convert the building to market rate or low-income housing, said CBRE senior vice president Michael Shustak, who has the listing. Though he declined to identify the brother and sister who own the structure known as the City Towel Supply Company, Shustak said the building has been in the family since the 1930s.
History Lesson: The owners of the City Towel Supply Company, an industrial cleaning business, built the six-story edifice on the current plot in 1923, and purchased the three-story building next door (it had been completed two years before). An undated black and white photo shows the Royal Wholesale Cigar Company occupied a ground-floor space on the north-west corner of the intersection. The cleaning company eventually went bankrupt, Shustak said.
Where It’s At: The building is in the middle of Skid Row, across the street from the Midnight Mission and the Weingart Center. It’s a four-block walk from several eateries on Main Street.
Occupancy: The property is currently 58.5% occupied. The building houses mostly small-item manufacturing businesses, including one that makes clapboards, those things on a movie set that clap shut after the director yells “Action!” Another of the 20 or so tenants is an audiovisual repair shop. Several areas have been built out for offices.
Prime Candidate: Because of its proximity to multiple missions, the Weingart Foundation and other services for low-income and homeless individuals, Shustak said the property would be a perfect candidate for subsidized housing. He noted that the $28 million Gateways Apartments opened around the corner, at Fifth and San Pedro streets on Nov. 7. Additionally, the building may qualify for historic tax credits.
Adaptive Reuse: The building’s high ceilings and a lack of interior bearing walls make it attractive for adaptive reuse conversion, Shustak said. That’s the process in which aged, usually defunct buildings were reborn as modern housing.
Compared to What?: “Everything is negotiable,” Shustak said of the $6.3 million asking price. Comparable properties in the vicinity include the Case Hotel at 1106 S. Broadway, which is in escrow for $13.5 million. A building at 1060 S. Broadway, which measures 833,600 square feet, is nearing a deal for the asking price of $10 million. The United Artists Theatre, which is 140,000 square feet, sold for $11 million; the building at 929 S. Broadway will open as the Ace Hotel in January 2014. Back in April 2012, the 78,500-square-foot Desmond Building, at 425 W. 11th St., sold for $16.25 million. Of course, those properties might fetch higher prices considering they are closer to (or in) South Park, not the heart of Skid Row.
Who’s the Buyer?: While Shustak believes the property would be best suited for housing, he noted that another option would be for creative office space. Environmental, fashion and architecture firms have been trending toward creative spaces more than traditional office settings, Shustak noted. Several clients have indicated interest in that possible use.
Contact: Michael Shustak, a CBRE senior vice president, (213) 613-3338 or Michael.Shustak@cbre.com.
© Los Angeles Downtown News 2013