Source :: Los Angeles Business Journal, By
Date :: December 04, 2006
When Sonny Astani said two weeks ago he was holding off on building a high-rise condo in downtown Los Angeles, it raised eyebrows in the real estate community.
In an industry not known for its openness – in which anything less than boosterism normally demands the veil of anonymity – the developer’s remarks stood out. But for Astani, a relative newcomer to the high stakes game of downtown development, that candor is nothing new.
“When Sonny says how it is, it’s how it is,” said Astani’s wife, Jo. “He really has nothing to hide.”
His openness has served the 52-year-old Astani well as he has grown his Beverly Hills company, Astani Enterprises Inc., and raised its profile in Los Angeles’ real estate game. And perhaps given where he came from, it all makes sense.
In the early 1980s, he was trying to get into real estate as a broker. Astani, an Iranian immigrant who came to the United States in 1976, was evicted from his apartment in Brentwood because it was converted to a condominium. He couldn’t even live in his car; it was repossessed.
“It was a tough time,” said Astani, a stylish, balding man whose trials are evident on his face. “It was an important part of my life. At a very young age I was basically homeless for a little while. It was a good lesson.”
After starting his development career by building smaller apartment buildings across the city, Astani’s name can now be seen plastered on signs at high-rise construction sites across downtown Los Angeles.
And though he has announced plans to at least temporarily shelve one of his two 30-story towers at his Concerto project at Ninth and Figueroa streets, he is proceeding with the rest, maintaining that downtown is a great, long-run development opportunity.
Indeed, in a demonstration of his commitment – and perhaps his own memories – Astani recently donated $1.5 million to the Skid Row Housing Trust, completing the funding it needs to build a San Pedro Street apartment building for mentally ill homeless.
“He sought us out,” said Mike Alvidrez, executive director of the trust. “I think this sets an incredible example for the rest of the business community.”
But, for now, industry insiders are noting Astani’s admission that there appears to be a slowdown of the downtown condominium development.
Some see his decision to pull back from the project as a sign of a miscalculation, or at the very least an unexpected setback because of rising construction costs. Others say it just might be the sort of pronouncement that makes the local development community talk a little more frankly about the reality of a slowing residential real estate market.
Either way, though, no one wants to be quoted.
Astani began his real estate career as a broker, but that didn’t work out well. He then started buying apartment buildings, then building them. Through those ventures, he said he learned the business of building from clients, by traveling to City Hall and copying city plans, and by driving the neighborhoods.
Since 1985, when Astani became a builder, his company has developed 2,000 units and currently manages 5,000, taking on other companies’ buildings. Between 1985 and 1990, alone, Astani boasts of putting 40 buildings on the map in Los Angeles. Now, the company has about 2 million square feet of downtown real estate in varying stages of development.
Astani Enterprises is unique in that Astani has positioned his firm as a multifaceted company: a builder, owner and operator of apartments and condominiums. Astani has modeled his business that way for about 20 years and said he knows of no other developer in Los Angeles that does this.
“I developed that niche, and that’s been unique,” said Astani, who has long relied on his master’s degree in engineering from USC in his development and construction career.
However, many bypass the developer-builder-operator kind of business structure in favor of specializing.
Tom Cody, a principal at the South Group, a condo developer that is active downtown, said that the multifaceted business structure “is not that unusual in a suburban context. In this market, it is atypical to be doing urban high-rises. I think it definitely gives you more control but it gives you more risk. From where I stand, it is potentially riskier.”
Astani said his company’s multiple strengths in development and construction give him some advantages. He gains some efficiencies by eliminating middle men, and it allows him to pursue things that others might avoid.
An example is Astani’s 30-story Concerto tower at Ninth and Figueroa streets, where construction has begun. Unlike many other condo towers, the project’s parking garage will be built below ground. The standard design for condo or apartment high rises calls for six to eight stories of parking that begin at ground level with residences built on top.
“He’s designed it so parking is completely underground, with a retail band at the street,” said Mark Tarczynski, a senior vice president at CB Richard Ellis Group Inc., who specializes in downtown residential properties. “Aesthetically it is more pleasing to see residences one story above the street rather than eight levels of parking. He is certainly a visionary when it comes to developing towers.”
Of course, building underground is far more expensive than building above it. But the high-end condo units will sell for a premium, which helps offset the greater cost.
In addition to his Concerto project, Astani has two other key developments downtown – Vero, which is slated to open at the end of the month, and Opus.
Vero is a 200-unit condo building at 1234 Wilshire Blvd. Opus, located at Eighth Street and Grand Avenue, will include 875 units, built in three phases of development. That project is about a year away from breaking ground. At Opus, Astani has said that he may scale back a 15-story building to eight stories if rising construction costs do not slow down.
Despite the cancellation of one of the Concerto towers, Astani is bullish on the downtown real estate market, calling it a “candy store.” Astani said that downtown offers a variety of available products – from lofts in adaptive reuse projects to new condo units in high-rise developments – that will make it appealing and unique for years, even if there is a temporary slowdown.
“Downtown is an empty canvas with diamonds in the rough,” said Astani. He plans to focus his developments efforts there for the next 10 years. “We as developers, civic leaders, and architects pick them up and polish them. We are beginning to see a new generation of buyers move downtown.”
With all of his projects, Astani said that he is always interested in doing something interesting architecturally, whether it’s the winter gardens, or indoor-outdoor gardens, he has planned for larger units at Concerto, to the curved, undulating exteriors he envisions for parts of the Opus project.
Shane Astani, the developer’s brother and head of Astani Enterprises’ retail arm, said his brother puts “his heart and soul into the architectural aspects of everything he does.”
Astani said he is inspired by buildings he sees while traveling, and counts Renzo Piano and Richard Neutra among his favorite architects. The Neutra connection makes sense; Astani lives in a Neutra-designed home in the Pacific Palisades with his wife and three young children, Sinjun, Tamzin and Tegan.
The architecture of downtown also resonates with Astani. He has been a part of the scene there for 20 years, starting in the 1980s when he frequented edgy artists’ lofts and cavernous nightclubs.
At his Beverly Hills office, Astani displays a large piece of artwork he bought from a downtown artist in 1980 as a reminder of that era.
“I paid $2,000, which I didn’t even have at the time,” he said.