February 21, 2024 Bianca Barragán, Southern California
Courtesy of Newmark: With a bridge loan, work to convert the office building into apartments can begin.
Culver City-based investment firm Urban Stearns has secured financing to begin converting a nearly 300K SF office building in San Pedro into more than 200 apartments.
Lenders BH3 Management and F2 Capital announced Wednesday that they provided a $17.5M bridge loan for pre-development costs associated with the adaptive reuse project. Terms of the loan were not disclosed.
When complete, the property will contain 244 apartments with an average unit size of 839 SF, according to a statement from the lenders.
“There’s a big craze right now in metro markets for office to housing conversions, but few projects have gotten done,” F2 CEO Jonathan Fhima said in a release. “We’re proud to have the right partners and are excited to assist with delivering this type of product to the market in an area that's already so unique.”
The release identified Forbix, a real estate lending, advisory and investment firm with offices in Calabasas, and Urban Stearns as borrowers for the project.
The building was already entitled for the conversion when it sold in March 2023. Property records show the sale price was $28.9M. The property at 222 W. Sixth St. is also in a federal opportunity zone.
The popularity of office-to-apartment conversions has soared since the rise of hybrid and remote work. While they can be challenging to execute, they are not impossible.
The Los Angeles metro had 2,442 office-to-apartment conversions planned for this year, up 6% from 2023, according to a RentCafe report. One conversion veteran, Jamison Services, has plans to turn a 33-story office tower next to the 110 Freeway at Seventh Street into apartments.
Article from Bisnow