With the residential condominium market stuck in the mud, Daniel Khakshouri is going commercial. Khakshouri, chief executive of Los Angeles-based Pacific Realty Ventures, hopes to open his first commercial condo conversion project in Toluca Lake by June. Since founding Pacific Realty Ventures in 2001, Khakshouri said he has converted about 15 apartments into condominiums, roughly five of them in the San Fernando Valley. The goal, he said, is to take underperforming assets, convert them into condos and give current tenants a better value than they previously had. The firm helps arrange attractive financing for prospective tenants, as well. However with foreclosures and short sales still plaguing the single-family and residential condo market, Khakshouri said his model no longer exists. “In today’s market, I can’t provide that same value,” he said. “If I can’t provide value, my business model doesn’t work.” Indeed, the San Fernando Valley has seen its share of failed condo projects lately even as the economy has slowly improved. In February, Raintree Partners purchased two luxury condo projects built in 2011 that never made it to market. The Laguna Niguel-based company will rent out the 63 units in Sherman Oaks and Studio City. The last apartment to condo conversion Khakshouri did opened at the beginning of 2011, he said. So in December, Pacific Realty purchased a 24,000-square-foot medical office building on 4418 Vineland Ave. In addition to the offices, there are several retail spaces filled by medical-related businesses that will also be converted. According to CoStar Group Inc., Pacific Realty paid $3.3 million for the office building and a nearby property, which the company plans to use as parking for its medical condos. Khakshouri said he was attracted to the property given its location in a state enterprise zone near the Hollywood Freeway and Ventura Freeway interchange. He also said he ran an analysis on the more than 60-year-old building, which he said showed current tenants would pay less per month by purchasing their unit. There are currently about 20 units, occupied by 10 medical professionals and the building is about 88 percent occupied, Khakshouri said. “The intent is for everyone to stay,” he said. “If you are paying $5,000 a month and you can buy it for $4,000 a month, or $3,000 a month, it is a no brainer.” Although the building is zoned for medical, Khakshouri said the units also would be suitable for attorneys, accountants and other professionals. Pacific Realty is in escrow on two more medical office buildings — one in Sherman Oaks and one in Silver Lake, Khakshouri said. He noted he’s also in talks to purchase an office building in Warner Center. One benefit of Khakshouri’s new vision is time savings. Because commercial units are usually already high quality, he said, gutting the space isn’t usually required like it was when Pacific converted residential units for ownership. Still, Pacific Realty is planning a few upgrades, including updating the building’s lobby and increasing the energy efficiency in the building, Khakshouri said.
