When Jason Fergerstrom became the leasing consultant for Bunker Hill Towers four and a half years ago, he had no experience in leasing or in residential real estate.
He had been in management at Insignia, a commercial real estate company. But he wanted the challenge provided by sales. And a challenge he got.
As someone who only had been to downtown once before, Fergerstrom spent the first month convincing himself that downtown was a good place to live. First he opted to move downtown himself. Then he scoured the area for restaurants and entertainment venues.
He spent the next several months convincing potential tenants that downtown was the place to live.
“Before, they’d come down and go, ‘I’m not sure I want to live here,’ and ‘How safe is this neighborhood?,'” he recalled. “Most people thought they’d get shot in the street. Most people before maybe came down to downtown three or four times in their life.”
Now, he doesn’t have to sell downtown very hard. Leases are being signed at a steady clip as downtown’s reputation as a viable place to live begins to rise. Rents are beginning to rise as well.
“The reality is that the leasing is the easiest part of the process,” said Ed Rosenthal, historic properties specialist and leading broker of downtown’s historic buildings at Grubb & Ellis Co. “What we’re finding is people are eager to rent, and most of the units are going like hotcakes, literally.”
Developers have cut back on advertising and are speeding up second and third phases of projects to meet the demand. And those involved in developing and marketing developments expect the influx of residents to the central city to continue.
“I have been here four and a half years, and it’s changed drastically,” said Fergerstrom. Bunker Hill Towers were built in 1968, long before the current wave of apartment and loft renovations. “It started with the Staples (Center). That means nothing to us, but it put an emphasis downtown.”
The new wave of residential projects downtown was at first disconcerting for Fergerstrom.
“Ultimately, because we’re quite a bit different, we welcomed competition because it puts an emphasis on downtown,” he said. “More people moved down here. I know there’s a potential of 40,000 units in the historic core. We’d actually like to see that happen.”
And it’s well on its way.
Tom Gilmore’s lofts in the Old Bank District downtown, around Fourth and Main streets, are almost fully leased after becoming available last summer, said Hal Bastian, Gilmore Associates leasing director, another person involved in drawing people to the city’s central core to live.
Gilmore’s first building, San Fernando, generated so much interest that Bastian said he hasn’t had to do any advertising other than in the L.A Weekly since October. The second project, the Hellman Building, opened Feb. 1 and has three units out of 104 still available. The third building, The Continental, began pre-leasing its 56 units and has already rented out 27 of them since May 23. Scheduled to open in August, The Continental is expected to be fully leased within a month and a half, Bastian said.
Waiting lists
Premier Towers and Spring Towers, with a combined 157 units, are completely leased with a waiting list of 10 to 15 people at a time, said Rene Veyre, manager of Spring Towers LLC.
And each phase of the Medici, an upscale apartment complex downtown with 335 units near the Harbor (110) Freeway, was “fairly leased up in advance of the opening,” said Geoff Palmer, owner of G.H. Palmer Associates, developer of the Medici.
Competition has also caused many leasing agents of existing buildings to bump up their sales pitches, as well.
At Premier Towers, which were built in the late ’80s but purchased by new management last year, many prospective tenants negotiate by pointing to the ever-increasing options downtown.
Veyre said he stresses that rates are more reasonable at Premier Towers.
Partly in response to the strong demand, developers have been quick to raise rental rates. Monthly rents at downtown lofts can range from $790 to $6,000 a month, depending on size, view and location.
A few prospective tenants are still concerned about not having enough to do downtown, Fergerstrom said. For them, he has a ready list of entertainment options to recite Staples Center, free concerts at California Plaza, the Museum of Contemporary Art, the Music Center, movie theaters and no fewer than 20 restaurants within walking distance of Bunker Hill. On the horizon Disney Hall and potentially the sprawling L.A. Sports and Entertainment District, a planned development surrounding Staples Center that was approved by the city Planning Commission May 23.
The new wave of downtown residents is different from those of 10 years ago, said Peggy Moore, chairwoman of the Community Redevelopment Agency and a resident of Bunker Hill.
Ten years ago, residents were more corporate professionals since L.A. had more big businesses. Today, many of the residents are younger and more creative types, particularly as L.A. has become home to many small businesses, she said.
In addition, a number of new downtown residents are coming from outside the area, places like Chicago, New York and San Francisco, so they are already familiar with downtown living and consider Los Angeles’ rents reasonable, Veyre said.
“They also have (heard) this forecast that this place will be developed in three to four years,” Veyre said. “Maybe, to them, it’s an investment.”
