Co-ops, long a popular but sometimes controversial form of for-sale housing in cities like New York and San Francisco, are starting to catch on in Southern California.
Last week alone, the Beverly Hills Planning Commission heard three applications from apartment building owners wanting to convert their properties into for-sale co-ops.
While the numbers remain small, conversion activity has been growing in recent years as housing prices balloon but rents remain relatively flat.
In Beverly Hills, there's been noticeable co-op activity because of relaxed parking requirements. Five conversions have taken place within the last 24 months a pace that has some city officials, including Mayor Mark Egerman, questioning whether the city needs more co-op regulations.
"We shouldn't allow it to continue without looking at it," said Egerman. "We might decide it's the right course of action but that decision should be made after considerable conversation and debate."
Co-op prices tend to be below condos and single-family homes largely because they are usually converted from older apartments and office buildings, which don't have the same value as newer, high-quality condo buildings. Also, because they are conversions, co-ops may not have as much parking or luxury features a newer building would provide.
Unlike a condominium, where buyers own the space between their walls air rights as it's called owners of co-ops are given shares in the entire building and have a long-term lease for their particular unit. As with condos, the property is run by a homeowners association but with co-ops that body can block a sale by not agreeing to transfer a lease to a prospective buyer.
* The full version of this story is available in the Feb. 28 edition of the Los Angeles Business Journal.
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