Last week a building being converted from offices to a mixed use of housing and retail in Manhattan made the news for a buckling support on the 21st floor. That is scary but at least they caught it and were able to address it before it became a horrible disaster. Realtor.com did a deeper look at the issue and what is means for buyers in conversion projects.
“Generally, if the structure is damaged, you’ll see signs of it right away,” says MIT professor and structural engineering specialist Jerome Connor in the article. While structural engineering is not my expertise, I know enough to insist my buyers of any property, whether it is new, older, or in a converted building, do their due diligence on both the unit they want and the building at-large. We are seeing more of these large-scale conversions in Southern California. (I am looking at you, Grossmont Center!) Some take the form of tear down and rebuild but if they don't we have to really consider the underlying structure.
Historically we have also seen apartments being converted into condos. Apartment to condo conversions surged in two major national waves: the late 1970s/80s and the mid-2000s. Both periods were fueled by real estate shortages, low interest rates, and the potential for developers to make higher profits selling individual units compared to operating rental buildings
In Southern California, including San Diego County, the first boom brought a rush of conversions that eventually led local governments—such as the City of San Diego and La Mesa—to implement tenant protections and conversion moratoriums.
The second wave was sparked by aggressive interest rate cuts by the Federal Reserve. Between 2002 and 2004, the number of apartments sold to condo redevelopers nationwide rose nearly tenfold. By the end of 2005, more than 260,000 apartments had been taken off the rental market and converted according to the Kiser Group.
We definitely need more housing locally so conversions are a logical approach. If you buy in one make sure you understand the underlying structure and have inspections done that answer any questions you may have. I am interested to see how the Grossmont Center project plays out since they have not shared a master plan for the residential piece yet. Recently announced Bass Pro Shops is an interesting addition to the project now let's get on with what we care most about, housing.
