Moving on Up

Empty condos become luxury rentals in the latest attempt to revitalize downtown

“I’d like to see a grocery store there,” John Tippins says.

We’re standing in front of one of downtown’s biggest eyesores, Neonopolis, and there is no way my brain can slap a Whole Foods sign, or the idea of it, on this place.

But Tippins can. He is hopeful that a fully leased Streamline Tower, soon to be re-branded The Ogden, across the street from Neonopolis at Las Vegas Boulevard and Ogden Avenue, can help spur some redevelopment in the area.

As the regional director for ST Residential, based in Chicago, Tippins oversees leasing and management at Streamline, along with the South Strip’s Loft 5 near Las Vegas Boulevard and Pebble Road, and One Las Vegas at 8255 Las Vegas Blvd. South. ST Residential also counts Newport Lofts at 200 Hoover Ave., and Monterey at Las Vegas Country Club on Joe W. Brown Drive, near East Desert Inn Road and Paradise Road, in its local portfolio. But Tippins says most of Newport’s units are privately owned and the group is trying to sell roughly 90 units at Monterey.

So how did so many troubled condo high-rises land in one company’s hands?

ST is referred to as a “managing member” of the fledgling public-private partnership between the FDIC and a group of investors, most notably Starwood Capital Group. The investors partnered with the FDIC after it took control of Chicago-based Corus Bank and its assets. Corus was the not-so-proud owner of roughly $4.5 billion in debt that included the five aforementioned projects.

Still in play is Juhl, on which Corus loaned $106.2 million. When the FDIC seized Corus in 2009, it planned to dispose of all of Corus’ assets, including Juhl. Currently, the project still remains in receivership—or in the hands of the FDIC. The word on the street is that Juhl too will soon be part of ST’s portfolio. Tippins deflects questions on the property and asks that it not even be mentioned in this story. But it’s tough not to, since it could mean another 300 or so units for lease in the area, in addition to Streamline’s roughly 250 today. The idea of bringing some residential mass to the area is attractive in these lean times.

But for now, Streamline is Tippin’s baby.

He moved to the Valley from Atlanta 11 years ago, then sold and managed apartment buildings during the time when everyone living in a studio apartment was suddenly qualified to buy a home. Staying in the apartment game when it wasn’t sexy paid off for him.

“I got lucky,” he says, wandering floor to floor in the Streamline, showing off his favorite units. “Everything just came together really nicely for me.” Perhaps the most noteworthy unit is on the 16th floor, in the northeast corner of the building where the El Cortez sign blazes into a large window of the dusty unit.

“The building was sitting for two years. But we really didn’t have to do a lot to it,” he adds while talking about upgraded wood flooring, carpet and appliances, a roof-top pool with 90 mph-wind-rated furniture and more. All of it still has a luxury vibe from when an 815-square-foot unit sold for nearly $400,000, and a 1,698-square-foot unit sold for $930,000 in 2008. Of the 275 total units, only 27 actually closed in a 2008 flurry when marketing brass tried feverishly to get deals done before the economy tanked.

In the past two years, a 1,500-square-foot unit sold for $159,000, while a 1,200-square-foot unit is in escrow at $135,000. Both were short sales.

Gary Fisher, who oversees leasing at Streamline and lives in a 15th-floor condo, was also part of the team that sold units at the property. His assessment of today’s situation is candid.

“It’s a lot easier to rent them for a thousand bucks a month than sell them for a million bucks,” he adds.

Both Fisher and Tippins say they are going the grassroots marketing route out of the gate, befriending local business owners and reaching out to the nearby legal community. Tippins says there will be about 20 to 30 move-ins in the coming weeks. The El Cortez has finished its welcome baskets for lessees, and the Streamline leasing team is reaching out to other local businesses to cross-market its property.

“The great thing about everything that goes on down here is that it’s a real partnership. It’s not just a bunch of individual businesses,” says Alexandra Epstein, executive manager of the El Cortez.

But price could become a sticking point for Streamline. Larry Murphy, owner of Salestraq, a local real estate research firm, is not convinced that $1,000 for a one-bedroom unit—on up to $1,800 for three-bedroom residences—is a realistic price point for downtown yet.

“There’s always been a ratio between how much rent you can get and how much it costs to buy something,” Murphy says. “Right now the high-rise market is probably selling for under $200 a square foot. I just don’t think they’re going to generate that kind of rent in that location.”

Today, on the MLS, there are 20 high-rise rentals available from private owners between the Soho Lofts, Juhl, Newport and Streamline properties. Prices range from as low as $1,000 for an 859-square-foot unit at Streamline, to as high as $1,900 for a 1,600-square-foot unit at Newport Lofts. There’s also a 4,915-square-foot penthouse suite at Soho for $7,500 per month. Leases executed—48 of them per the MLS—at these projects in the past two years fall around $1 a square foot. But it remains to be seen, when introducing so many units at this price point, what the market will dictate in the area.

The appeal of downtown living in Las Vegas still has a way to go in order to convince the legal and professional community to bypass the suburbs, says Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at UNLV.

“I don’t think Las Vegas is ready for that move from the suburbs to a renovated downtown yet. I’ve seen it happen in other cities, like St. Louis most recently, but it took years to happen. … But in the long run hopefully it will.”

Aaron Chepenik, 39, who owns The Griffin, a bar on Fremont Street East, recently moved into a three-bedroom unit at the Streamline. Chepenik was renting at Soho Lofts for the past four years and loves the idea of a quick walk to his business. And he argues the Streamline price is in line with the two-bedroom unit he had at Soho. Chepenik prefers rentals, saying it’s more likely to bring people who actually live long-term in units, as opposed to part-time vacation condo owners.

There’s one other motivation for living in Streamline, according to Chepenik.

“The greatest thing about this is they’re painting it white,” he says with a laugh. “I remember when it was going up it looked like this totally cool building, then one day I showed up and there was this big pink thing. It was gross. It just made it look dated.”