Mark borman
2014-2020 E 7th Street, Los Angeles, CA 90021
ADDRESS
2014-2020 E 7th Street, Los Angeles, CA 90021
LOCATION
Arts District
HISTORY
Built in 1923, 2014-2028 E 7th Street are two identical 11,200 square foot one-story brick and bow-truss buildings that were first used as a garage for Ford Model-T’s, and later hosted quinceañera parties and lucha libre matches.
DESCRIPTION
Restore the original charm of the building while modernizing the mechanical systems and introducing new sources of natural light.
SQUARE FOOTAGE
22,400 sf building / 28,713 sf land
NO. OF UNITS
2 x 11,200 sf each
GENERAL FEATURES
Polished concrete floors / Exposed brick walls / Custom monumental door and window system / Skylights / New kitchens, office and conference rooms /
32 parking spaces
GREEN FEATURES
Restoration and conversion of a 90-year old building / Thermal chimney /
Natural ventilation / Operable skylights / Non-VOC paints / High efficiency
heating and air conditioning systems
CASE STUDY
Located in the southern portion of the Arts District, 2014-2028 E 7th Street are two identical 11,200 square foot one-story brick and bowtruss buildings built in 1923 that were first used as a garage for Ford Model-T’s, and later hosted quinceañera parties and lucha libre matches.
The Borman Group studied the trajectory and growth of the Arts District, combined with the character of the buildings and purchased the property through an unsolicited offer in January 2014. At the time, 7th Street was an unproven market for creative office or retail and was considered a fringe area plagued with a visible homeless population, graffiti and an inventory of underutilized or abandoned buildings. Specific to 2014-2028 E 7th Street, the buildings were in poor condition, there were legacy tenants with considerable term still left on their lease and blended rental rate of 81¢ psf gross.
The Borman Group led the design and construction and repositioned the asset through a full MEP and architectural overhaul while simultaneously marketing and branding the building to appeal to a flex / creative office user. The work resulted in the upgrade of the tenant profile that was looking to establish itself in the Arts District and achieved a new area rental rate ceiling.
The Borman Group repurposed the buildings by modernizing the mechanical systems and introducing new sources of natural light while painstakingly restoring the original character. Each building was leased to single tenants: one was a fashion design firm with a retail presence and the other was a flex user creative office / contemporary art gallery and restaurant / bar at a blended rental rate of $2.65 psf nnn.
The property was sold in 2016 through a marketed process that generated numerous offers, ultimately selling to an institutional national buyer at a 4.55% capitalization rate or $665 psf, both setting records in the Arts District.
FINANCIAL RESULTS
Acquired: 2014
Purchase Price: $4,900,000 / $220 psf bldg / $170 psf lnd
CAPEX, TI, LC Costs: $1,456,000 / $65 psf bldg
Total Expenses: $6,356,000 / $285 psf bldg
Total Sales: $14,900,000 / $665 psf bldg / $519 psf lnd
Unlevered Return: 2.34x
Unlevered IRR: 55.85%
Sold: 2016
Holding Period: 27 months
PHOTOS
AFTER
BEFORE
