Streamline Tower switches from condominiums to apartments

Having flopped once in its role as a catalyst for downtown redevelopment, the Streamline Tower is preparing to take its second shot in a different guise.

A fresh set of owners has begun applying some cosmetic touches to the 21-story building, notably new exterior paint, and has converted it from condominiums to apartments. Soon, the name will change to Ogden after the street that it faces.

"We don't think the demand is strong enough on the sale side," said Wade Hundley, the CEO of ST Residential, the Chicago-based company that took control of Streamline and several other Las Vegas condo projects a year ago.

"But," he said, "we think the market in high-rise rentals is going to be good here."

In particular, he points to the emergence of nearby new businesses along East Fremont Street, steps away from Streamline's front door, some new downtown employers and lower prices to help fill a building that has mostly gathered cobwebs since it opened in spring 2008.

"I think what Streamline is doing with the building is the right strategy," said Bruce Hiatt, a broker with Realty One.

Because selling high-rise condos continues to be difficult, he said that renting makes sense to generate cash flow while waiting for the market to rebound. Hundley said rentals at Streamline will start at $1,000 a month and will continue for a couple of years. Then, he said, the company will evaluate whether to return to condo sales.

Some real estate professionals wonder how much apartment rentals will improve Streamline's occupancy. After being touted by city officials and downtown business owners as a key to achieving the goal of a 24-hour, live-in downtown, only 27 of the 275 units at the project between North Las Vegas Boulevard and the El Cortez were sold as condos, the last coming in August 2008. Last year, the partnership that owned it filed for Chapter 11 bankruptcy protection and ultimately ceded possession.

"I think there's demand for high-rise rentals, but the market might be flooded," said Debbie Drummond, a real estate broker affiliated with Re/Max.

Bargain-seeking investors are buying many of the condos closer to the Strip for cash and then subletting them. ST Residential also owns two projects on the south end of Las Vegas Boulevard, Loft 5 and One Las Vegas, that are going rental.

"I believe it will be tough for them," said Marc Ehrlich, president of Hi Rise Living, which represents renters.

Until recently, Ehrlich oversaw marketing and sales at the Panorama towers on the west side of Interstate 15.

"I don't know how deep the market is to absorb the supply that is now out there, both direct and hidden rentals," he said.

Hidden rentals are properties that are being subletted by their investor owners.

The handful of owners has rented out Streamline sporadically, but not with big results. County records show that the homeowners association has filed liens against several of the owners, mainly investors who have decided not to put more money into an upside-down asset.

ST Residential is a partnership between the Federal Deposit Insurance Corp. and private investors that took over just more than 100 troubled loans scattered all over the country that were held by Corus Bank when it failed a year ago. Included in the portfolio was ownership of the Newport Lofts and the mortgage on Juhl, both downtown condo projects.

Hundley, who spent seven years as executive vice president and later president of regional casino operator Pinnacle Entertainment before resigning in 2008, was picked to lead the company.

Juhl has sold slowly and Hundley expects to take possession of the project from San Diego-based CityMark Development next spring.

The Streamline makeover includes painting it white with silver-and-gray accents, as opposed to the predominant color that some call beige and others a shade of pink, ST regional director John Tippins said. External lighting and signs will be added to try to draw more attention in the skyline.

ST Residential will also expand and refurbish the front lobby and relandscape the rooftop pool and deck. Hundley estimated the budget would run about $2 million.

Rents will run from $1,000 a month for an 847-square-foot unit to $2,400 a month for a 2,044-square-foot corner unit. As a condo, the prices paid ranged from $413,000 to $930,000, although the majority were less than $600,000.

Real estate professionals debated whether that was low or in line with other rented condos. But the building's cost basis has plummeted; it cost $125 million to build, but a Corus affiliate valued it at $34 million when it took over in June 2009, county records show.

Tippins said 30 of the 248 units to rent should be occupied by year's end based on current activity. More tenants will come next year, he added.

"Heads in the beds," he believes, will help lease the 12,000 square feet of street level retail space that has remained vacant.

Contact reporter Tim O'Reiley at
toreiley@reviewjournal.com
or 702-387-5290.