Crescent Heights hopes to convert LA medical offices into commercial condos
Ownership model makes sense for doctors looking to stay at same location long-term
Crescent Heights aims to convert a medical office building into commercial condominiums, according to an application filed with the Los Angeles City Planning Department on Jan. 9.
The Miami-based developer has plans for a 200-unit building at 6200 West Wilshire Boulevard in L.A.’s Mid City West, according to the filing.
There have only been 23 office building conversions in the region since 2016, according to the latest data compiled by CBRE. Although rare in the L.A. market, the conversion isn’t surprising given the deflating demand for office space, prompting owners to come up with fresh ideas for their properties.
“Delivery will be later this year following a full renovation of the common areas and building systems, including the facade,” Elliott Kahn, the L.A.-based partner at Crescent Heights, told The Real Deal. “We feel our central location, proximity to hospitals, and the lack of small owner/user medical/office space for sale in a 10-mile radius puts us in a unique position to provide value for buyers and lessees, especially medical practitioners that typically have expensive build-outs and prefer to remain in their locations for longer terms.”
Los Angeles has been one of the worst-hit cities in the U.S. in terms of office occupancy losses, ranking second behind San Francisco in terms of negative net absorption, according to recent research from Moody’s Analytics.
“The permanence of dynamic hybrid models has effectively muted office demand, making the year of 2023 the most downbeat since the Great Financial Crisis,” analysts wrote.
CBRE’s analysis found that these types of conversions “refuel urban economies that continue to suffer from reduced demand for office space, primarily older and obsolete buildings, and this trend is no different in the Greater Los Angeles, Orange County and Inland Empire region.”
Crescent Heights has run into trouble in the urban real estate slowdown, particularly in the multifamily sector. In November, the company put its NEMA Chicago, a luxury apartment tower among the Windy City’s tallest buildings, up for sale. In San Francisco, Crescent Heights negotiated with lenders to keep its NEMA San Francisco apartment tower after defaulting on a $384 million loan.