Movin’ on down
As the economy worsens, Downtown is finding itself an unexpected beneficiary
Thu, Jun 11, 2009 (midnight)
Photo: Beverly Poppe
When Matt Novak and his girlfriend were house-hunting recently at the luxury Urban Lofts Downtown, they say they peered out a window and saw a druggie on the street getting a fix. The man then casually tossed the needle onto the ground.
That scene might have deterred most wannabe urbanites. But not this couple. They will move into the 11th Street project in July. Novak, 27, has lived in New York City, Paris, London and Liverpool (the grimiest but best of them all, he says). Novak believes Downtown Las Vegas’ problems (poverty, crime, decrepit buildings) are the reality of any inner-city neighborhood, and that it adds an “interesting charge to the culture of the area.” No matter what The Man tries to do to clean up Downtown, the area is going to resist it, he says. Downtown isn’t fake. It’s not plastic. It’s not a master-planned community.
“Instead of seeking out an avenue of culture, you’re assaulted by it,” says Novak, the general manager of a Gucci clothing boutique in the Wynn. “That’s what’s great about Downtown. Even though some things are slummy and shitty, there’s something authentic about it. You can’t find anything else like it in Las Vegas. There’s an aesthetic value to it that I do buy into.”
Housing experts question if Las Vegas has enough young professionals such as Novak, with credit scores above 650 and more than $10,000 to buy into one of the hundreds of vacant condos. The days of qualifying with a FICA score in the basement are long gone.
Downtown condo sales reached to the ceiling in 2007 and then crashed in 2008, according to SalesTraq reports. Starry-eyed hipsters signed the papers on condos in Urban Lofts and Newport Lofts, but then couldn’t close on the loans. Investors at luxury properties such as Juhl and Streamline shied away. Sales slipped into the single digits.
But recent Multiple Listing Service reports show some activity with the resale properties.
“Two years ago we never would’ve dreamed that these would be selling for $135,000,” local Realtor Steve Franklin says about a studio-sized Newport loft that’s up for short sale. “It’s a steal.”
If there was any crime committed, it may have been against consumers in 2006-07, when that same Newport loft sold for about $400,000. But as those properties are coming back on the market as foreclosures and short sales, home seekers such as Novak have an opportunity to get into the Downtown luxury-condo market with lower-priced leases or mortgages.
Novak isn’t buying—not with a career that promises a move to London in two years. He will rent the 2,000-square-foot loft for about $1,700 a month, and his $30,000 interior-decoration plans would make any young professional beg for an invitation to the house party. The look will be ultramodern with touches of Baroque furniture, inspired by the French designer Philippe Starck and American hotelier Ian Schrager, of Studio 54 fame. The clean-cut lines of a Ligne Roset couch. A Noguchi Wingnut table. A space-age Eero Aarnio Ball Chair (you’d recognize it from the movie Men in Black). Textured rugs will engulf your feet like a sea anemone. The parties will be jumping with a turntable and massive speakers. All of this in a place “probably more dangerous than the suburbs, but it lets you know you’re alive,” Novak says. And if any of the locals want to start any trouble, he can just bring out his human skulls, museum tribal pieces from the Philippines and Nepalese skull-cap bowls.
A short sale is attractive to buyers such as Amos Glick. He recently toured a 912-square-foot Newport loft selling for $180,000. Then Glick met with Franklin, who showed him a resale unit going for about $50,000 less.
“These private sales are definitely a huge deal,” says Glick. His voice echoes across the cement floor and nearly 11-foot-high ceilings.
Glick is 41, single and living on a fixed budget as one of the white-tuxedoed comedians in the Wynn’s Le Rêve. He’s not stepping lightly into a real-estate investment. He needs to keep a monthly mortgage at about $1,200.
A short sale is a property sold below the amount owed on the loan, in agreement with the bank, so the owner can avoid foreclosure. Most of the units aren’t new, but they’re cheaper. The 10th-floor loft with a view of the Fremont Street Experience smells strangely like motor oil. Another short-sale loft a few floors up, with the west view of Symphony Park (formerly Union Park), has a few holes in the walls and a missing cabinet door. But it’s $132,500 for about 900 square feet.
Downtown condo buyers are already paying much more per square foot than what you would for a house in the ’burbs, where a buyer could run off with a three-bedroom home for $25-$50 a square foot. The average price per square foot for a Downtown condo is $135. During the frenzy of 2006-07, SoHo Lofts, at Las Vegas Boulevard and Hoover Avenue, averaged $448 per square foot, Franklin says.
But you don’t move Downtown because it’s cheaper; you move there for the lifestyle.
“If you want to live in the suburbs and watch the leaves blow down the street, then the suburbs might be for you,” says Trinity Schlottman, division manager for Urban Lofts. “But if you want energy—seeing the cops running up and down the street, the homeless—that all goes into the energy of creating the Downtown core.”
The Urban Lofts, at 11th Street and Carson Avenue, are intended for middle-income professionals. Residents own their three-story building, sided with 26-gauge steel, and the land it sits on. Twenty-one of the 30 lofts have sold, with the median price at $324,200. Only three sold in 2008. One so far in 2009. Urban Lofts has one short sale listed at $245,000, which forced the developer to bring down the price of two other units for sale in that neighborhood to $250,000-$300,000.
The story is a little bit of the same, but perhaps with a different ending, at the Fremont Street Lofts, also an Urban Lofts development.
Sixteen units on Fremont near Bruce Street are available, but so far only five have sold, ranging in price from $299,000 to $329,000. Schlottman says the company plans to build 49 more units, “depending on the market.” But Urban Lofts could switch its strategy. He says they may take the plans down to two stories for those looking to buy in the $250,000 range.
Newport, which is a 24-story tower at Hoover Avenue and South Casino Center Boulevard, sold about 100 lofts ranging in price from $400,000 to $1.4 million in 2007. Downtown Las Vegas boosters hype it as the cool place to be. The lounges and bars, with music venues and touches of art for locals, hint at the hip urban life. Yes, you can find a bit of it in Vegas. And you can live in a high-rise, says Adam Gafke, Newport sales manager.
“You find people here that want to be ahead of the curve, as far as Downtown is concerned,” he says. “They don’t want to be left behind. And they like the lifestyle of a high-rise.”
One of those pricey penthouses was sold to Blaine DeBrouwer, who owns a subcontractor business. He moved Downtown because of the lifestyle and the redevelopment promise. He’s run into culture—right there in his condo complex.
“One vacant corner penthouse has been used numerous times for art exhibits,” DeBrouwer says. “I went to dump my trash one night and saw an art exhibit going on. I went in and had a beer and shook hands with the mayor.”
He also has an expansive view from his corner loft: big blue sky, clay-colored mountains and the steel structures of excess dominating the Strip, derelict Downtown rooftops.
Franklin says the lowest loft sale prices are at Newport. Studios have sold from $131,000 to $165,000. Five sold in 2008. One so far this year, with others in contract.
Juhl is coming late to the party.
John Eisele, sales manager of Juhl, off Third Street and Bonneville Avenue, says the recently completed project does have 600-square-foot studio spaces near the $200,000 mark. He’s hesitant to divulge any price information beyond that on the 341 units. About five sales have closed so far in 2009. Those range from an 800-square-foot unit for $373,300 to a 1,126-square-foot unit for $465,800, according to a SalesTraq report.
Glick, the actor, has to move out of his rental, which is why he’s motivated to buy now, rather than wait to see if prices drop even lower. After looking at both lofts and houses, Glick decided to put an offer on a 2,600-square-foot Downtown house for $180,000. Glick says he needs a place where the value is going to remain stable.
“The house is the same price as the lofts, and I get a gazillion more benefits, such as more space and my own private pool,” Glick says. “It’s just so much more beneficial for me to have a home.”
And he’s not the only one who thinks so. The home he wants in the vintage McNeil Estates neighborhood has multiple offers.