Inside Izek Shomof's downtown Long Beach office-to-resi buy

"Because of the deep discount, the numbers made sense, he said. At the prior price tag, he'd have to charge $10,000 monthly rents for a conversion to pencil. His price probably puts it closer to the average of $2,000."

"The office tower is around 50 percent occupied, so he'll convert the vacant space first, allowing the tenants, who have around three to five year leases, to stay. Shomof was among the first developers to make use of Los Angeles' adaptive reuse ordinance, and he has done his fair share of conversions."

"The hardest parts are approval times and fees, he said. The fees are killing us, he said. For the Long Beach tower, he hopes to complete it in five years, and said he can break ground as soon as he gets the greenlight from the city."

Izek Shomof, known for revitalizing downtown Los Angeles's Spring Street corridor, is pursuing office-to-residential conversions in secondary markets. He acquired a 24-story, 460,000 square foot Long Beach office tower for $50 million ($109 per square foot), down from a $135.5 million valuation a decade earlier. The significant discount enables him to offer competitive rents around $2,000 monthly instead of the $10,000 required at previous pricing. The building is approximately 50 percent occupied; Shomof will convert vacant space first while allowing existing tenants to complete their leases. He plans a five-year completion timeline and anticipates breaking ground upon city approval. Shomof identifies approval timelines and fees as primary development challenges.

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