Breathing new life into downtown offices.

DOWNTOWN L.A. - For years, downtown boosters have been seeking answers to two puzzling questions:

What would it take to convince Angelenos to consider moving into the heart of the city? And what can be done with the large assortment of aging, empty office buildings that have been rendered obsolete by today's oversupplied commercial real estate market?

The central business district is starting to find a common answer to both. It's called "adaptive reuse."

In several other cities across the West, innovative developers are following traditions long established in New York's SoHo and similar districts in big Northeast and Midwest cities. They're converting outdated office and warehouse buildings into trendy loft units where residents live and sometimes work as well.

The district just east of downtown's core commercial area boasts a number of older office and industrial buildings converted into so-called artists' lofts.

But no one has successfully converted a large office tower in downtown's core into residential units since the late 1970s, when Maguire Thomas Partners converted the Pacific Telephone & Telegraph tower at 740 S. Olive St. into 308 senior citizen residential units.

But a Dallas-based development firm that has embarked on several such conversions in its home town is proceeding with an ambitious plan to convert downtown's long-vacant Roosevelt Building into about 185 residential rental units.

An affiliate of Dallas' Southwest Properties Group Inc. is in escrow to purchase from a Citibank-advised investment fund the 1920s-vintage Roosevelt tower, whose 11 floors of offices have sat mostly vacant for the last few years.

"The people from Dallas are making a very bold move; they're the first (developer) we've seen (since the late 1970s) that's really interested in creating this kind of housing," said Craig Stevens, a veteran local income-property broker who has analyzed prospective downtown office-to-residential conversion projects.

Stevens, who works at brokerage Lee & Associates in Brentwood, added that such conversions represent "the only thing that will save downtown," which has a scant white-collar residential base and little night life.

Downtown's core commercial district perhaps has as many as a dozen "great candidates" for reuse as residential highrises, said P.M. Realty Group's Carl Muhlstein, another veteran downtown office broker.

He identified Giannini Place, Subway Terminal Building, Brooks Brothers Building, National Oil Building and Fine Arts Building among the historic structures that would be logical targets for residential reuse. All those buildings have been plagued by high vacancies for years.

Muhlstein said that city planning authorities could generate substantially more interest in such conversion projects if they were to reduce current parking requirements and follow through on the liberalized home-business zoning regulations now under discussion.

Steve Kanoff, the Southwest Properties Vice President in charge of the Roosevelt project, noted that downtown's "bottomed-out" office market offers "opportunities to buy functionally obsolete buildings way below replacement costs - just like in downtown Dallas."

Originally developed as a medical office building - which accounts for its extra plumbing - Roosevelt is "an absolutely ideal" structure for conversion to "loft-style apartments," Kanoff added.

It has the exceptionally high ceilings that help define urban "loft" living, said Ari Sikora, principal of Silver Lake-based Urban Strategies and a development consultant to Southwest Properties Group on the Roosevelt venture.

Southwest Properties is designing units at the Roosevelt with "edgy aesthetic" touches, such as exposed original brick walls and concrete ceilings, she added. The tower, situated at 727 W. Seventh St., has underground parking and sits atop the Metrorail subway station at Seventh and Flower streets. Southwest plans to maintain the streel level as retail shops and continue leasing the second floor to a telecommunications company.

Focus groups with prospective renters taught the Southwest team that "interesting space" and "flexible floor plans" are keys to attracting residents now "turning back to the inner city and away from suburbia," Kanoff noted.

Creative conversions offering flexible amenity packages "are doing well all over the country," Sikora added, noting that the Roosevelt project won't need city subsidies and thus won't be required to reserve units for low- and/or moderate-income renters.

Kanoff cited confidentiality agreements with Citibank in declining to disclose what his firm is paying for the property - a price other sources estimated at less than $6.5 million.

But he did specify that "hard" conversion costs - i.e., not including the acquisition price - typically run about $65,000 per unit. And he estimated that Southwest will offer units averaging 850 square feet of floor space for about $1.20 per square foot monthly - just north of $1,000 for the typical unit.

Another adaptive reuse advocate, Charles Loveman, is finalizing plans for converting the top four floors of the five-story 1980s-vintage Pan-American building at Third Street and Broadway into 40 apartments.

Loveman said he is finalizing an agreement with the city's Community Redevelopment Agency that will provide CRA financial assistance for his project. Such assistance, if secured, would bring with it a mandate that he reserve a block of units for lower-income residents.

Loveman said the Seventh Street retail corridor is ripe for revival as a mixed residential/commercial neighborhood akin to New York's SoHo (south of Houston) or the LoDo (lower downtown) district now springing back to life in Denver.

"I think the market here is surprising people, but it's clearly a niche market," said Loveman, principal in his new Landmark Partners enterprise. "You have to be a special kind of person to live here; you work downtown, and you love the urban lifestyle and the arts.

"Downtown housing is really in its infancy today," he added. "Other elements besides the office component need to be strengthened - retail, entertainment, residential."

Downtown residential real estate specialist Rob Nesbitt said he's not surprised that it's an out-of-town operation taking the first big adaptive reuse plunge - given the L.A. "mindset of open land and backyard barbeques."

While the downtown professional community represents a part of the market for downtown dwellings, much of the demand today comes from foreign-born business owners, the principal of Wilshire Metro Realty Inc. elaborated.

Security represents more of an issue for native Angelenos than for out-of-towners, Nesbitt continued. "For people who come from New York or Chicago, security (downtown) isn't seen as a problem. But Angelenos see downtown as dangerous. Of course, it's not, relatively speaking."

Mark Tarczynski, a downtown retail real estate broker with CB Commercial Real Estate Group Inc. who lives at The Metropolitan, one of downtown's few apartment complexes built in recent years, said Southwest Properties "has the right idea" in converting the Roosevelt Building - especially now that the developer is planning a high-quality, view-oriented swimming pool on top of the tower, he commented.

"If they put in the pool...I might even move out of The Met," Tarczynski added.