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Equity Office Daily Brief: November 7, 2016

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Daily Brief

November 07, 2016

  EquilityOffice

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Wilshire Boulevard, once a mecca for drivers, is trying a different path. It could offer a blueprint for L.A.

Los Angeles Times

 

Los Angeles built Wilshire Boulevard as a majestic path for the automobile, and perhaps no place reflected that grandeur more than the Miracle Mile. In its heyday, this stretch of Wilshire offered drivers wide roadways divided by palm tree-lined medians and ornate street...

 


MGA Entertainment breaks ground in Chatsworth

Los Angeles Daily News

 

Van Nuys’ loss is Chatsworth’s gain. And it’s a big one. Bratz is moving into the neighborhood. The long awaited move by MGA Entertainment, creator of the popular Bratz doll is finally happening and Chatsworth is getting something it doesn’t have —...

 



BLOG & ONLINE NEWS

 

The Birth of the New Live-Work-Play Campus

GlobeSt.com

 

If we could peer into the future, we may see that live-work-play communities aren’t built around a submarket or neighborhood, but are a single campus with a residential, office and retail all in one place. At least, that’s the future that...

 


Beverly Hills Retail Building Sells for $5,000/sf

RENTV.com

 

Sterling Organization has purchased a 4.7k sf retail building in Beverly Hills’ Golden Triangle shopping district, just one block east of Rodeo Drive. The property was purchased for $23.5 mil, or $5,000/sf, in an off-market transaction on behalf of the firm’s...

 


Historic Property in Downtown Los Angeles Sold for $24 Mil

RENTV.com

 

The Merritt Building in downtown Los Angeles was acquired by an international investor in a recent $24 mil transaction. Located at 761 S. Broadway (aka 301 W. 8th Street), The Merritt Building is a historic, multi-story 55.9k sf ($429/sf) building located...

 


Rise in original programming by Netflix, Amazon to boost fortunes of LA landlords: Hudson Pacific

The Real Deal

 

The rising tide of original online programming is lifting the fortunes of L.A. landlords. Hudson Pacific Properties reported an 8.6 percent uptick in revenues in the third quarter, thanks in part to an increase in demand for space from the media and...

 


Brightstone Capital Partners and Artisan Realty Advisors Acquire Lantana Media Campus in Santa Monica, California

Yahoo! Sports

 

Brightstone Capital Partners, a global real estate investment management platform, and Artisan Realty Advisors, a Los Angeles-based real estate investment company, have formed a joint venture to acquire Lantana Media Campus in Santa Monica, CA, a four-building office campus totaling 478,713...

 

FULL TEXT


Wilshire Boulevard, once a mecca for drivers, is trying a different path. It could offer a blueprint for L.A.

Los Angeles Times

 

Los Angeles built Wilshire Boulevard as a majestic path for the automobile, and perhaps no place reflected that grandeur more than the Miracle Mile.

In its heyday, this stretch of Wilshire offered drivers wide roadways divided by palm tree-lined medians and ornate street lamps built around sculpted metal of svelte topless women. Back then, the Miracle Mile was one of L.A.’s top shopping destinations, with gleaming neon signs luring drivers to sprawling parking lots behind the streamline-designed stores.

The retail scene on Wilshire began fading decades ago as department stores closed and shopping malls became more dominant. But over the last few years, the Miracle Mile has been the center of a remarkable transformation that offers a window into what a Los Angeles of the future might look like.

Office buildings and shops are being replaced rapidly by upscale apartment complexes and mixed-use projects. What was once a center of commerce has now become more of an urban residential neighborhood, expected to grow even more once the Purple Line subway is extended under the Miracle Mile.

In a scene that makes some longtime Angelenos marvel, the area around Wilshire and La Brea Avenue has become a construction zone as workers begin building the Metro line, which eventually will connect downtown L.A. to the Westside.

The new Wilshire Boulevard often is cited by urban planners as a way Los Angeles can evolve. Voters on Tuesday will decide whether they agree. Measure M is a half-cent sales tax increase that would nearly double the length of Los Angeles County’s rail network, adding nearly a dozen rail lines and extensions, including a tunnel through the Sepulveda Pass and connections to Pacoima, Norwalk, Claremont and Torrance.

Backers say Measure M is essential to creating more mass transit and reducing solo driving. But beyond laying down new rail, officials are trying to build up residential development along corridors such as Wilshire so residents can live closer to transit options.

Developers are finding that Wilshire is a hot draw for residents, not necessarily because of the coming Metro line but because of its central location near the Los Angeles County Museum of Art, the Grove, the Farmers Market and other hip shopping and entertainment spots. The Miracle Mile is a relatively short ride from Beverly Hills, Hollywood and downtown.

When Brad Gold opened Black Dog Coffee 17 years ago, Miracle Mile “was like a fading showgirl,” Gold said. “When I went in there, what had been the Broadway Department store catty-corner to me was just a big empty hole.

“Those new apartment buildings have been great for me,” Gold said. The slowest days at Black Dog Coffee used to be Saturdays and Sundays, but the new residents have tripled weekend sales, he said.

The economic boom isn’t being enjoyed equally, however. There’s growing concern that the newer and pricier developments will squeeze out small businesses.

“My belief is we will see the closing of some mom-and-pop stores and that we will see more chains,” said John Barrentine of Red Real Estate Group. “I believe we will see a squeeze as rental rates go up.”

Others are more wary of the changes, saying they miss the distinctive restaurants and famous department stores like May Co., Ohrbach’s and the Broadway that once lined the Miracle Mile.

“I do not have the sense of a neighborhood with a main street anymore. Main Street USA as the Miracle Mile went away,” said longtime resident Jerry O’Sullivan. 

“It’s changed radically from a place that had a service component to it that supported the community to something now that — I’m not sure what it is,” he said. 

Development on the milelong stretch between La Brea and Fairfax has flourished thanks to relaxed height restrictions and zoning rules that allow for multifamily housing.

In place of the Broadway department store, there’s now a five-story complex with 284 units. One block east, Mullen and Bluett was replaced with a faux-Art Deco apartment complex housing a Chipotle on the ground floor.

Behind Wilshire Tower, where 14-karat gold ceiling details once greeted shoppers entering Desmond’s, studio apartments rent for as much as $2,800 a month.

A four-story apartment complex is planned for the parking lot behind the Art Deco Dominguez-Wilshire office building. 

And on the corner of Wilshire and La Brea is an enormous $105-million development with nearly 500 units.

A subway roaring under Wilshire isn’t exactly what the street’s namesake envisioned.

When Gaylord Wilshire gifted the strip of land that would bear his name, he did so with the condition that rail lines and commercial trucks would be banned, said Kevin Roderick, author of  “Wilshire Boulevard: Grand Concourse of Los Angeles.”

Wilshire was the “epitome of that driving culture,” Roderick said. Shoppers driving on Wilshire west from downtown would have seen drive-in restaurants on nearly every corner and dozens of gas stations, he said. Today, there are virtually no gas stations between Westlake and Fairfax.

“It’s kind of a cool vehicle — no pun intended — to look at the history of L.A.,” Roderick said of Wilshire.

The subway eventually will have stations at La Brea, Fairfax (which is home to LACMA, the sen Automotive Museum and the upcoming Academy Museum of Motion Pictures) and La Cienega Boulevard. Two additional phases of construction will extend the rail line to the Veterans Administration’s West L.A. campus by 2035. If the half-cent sales tax increase on Tuesday’s ballot is approved, the full line is slated to begin service by 2024 — when Los Angeles hopes to host the Summer Olympics.

Skeptics remain, doubting whether more rail lines will get people out of their cars. Metro has been aggressively expanding the rail network in recent years, but L.A. County has not seen a major spike in ridership. Boosters say a Wilshire subway could be a game-changer because it runs through the heart of the city.

Still, developers and officials appear to be hedging their bets: There’s still plenty of parking available with the new apartments.

In addition to the subway, Councilman David Ryu wants to make improvements along Fairfax Avenue to make the area more walkable, with possible pedestrian paths to Park La Brea and the Grove.

“It’s about not being reliant on your car in that area,” Ryu said.

The new Purple Line is expected to bring even more residential development, some of it likely from Metro’s Joint Development program, which works with developers to build housing, hotels and commercial space around transit stations. At Hollywood and Vine, the program led to more than 500 new housing units and a hotel. In the Arts District, One Santa Fe has more than 400 residential units and 79,000 square feet of commercial space. 

Realtors say they already are seeing a resurgence in the neighborhoods just north and south of the Miracle Mile.

“There is certainly pent-up demand for condominiums in the area because people want to be in this location,” Barrentine said. “To be in this location and still to be able to get in near Wilshire Boulevard under a million dollars is appealing.”

The rental prices are being watched closely by residents and business owners. Christine Johnson of Miracle Mile Toys and Games looked into renting new commercial space when the apartment buildings opened down the street. The rent was prohibitively expensive.

“The price per square foot was certainly not intended for mom-and-pop businesses,” said Johnson, though she understands what landlords are doing. 

“I know they’re waiting for some kind of big name that’s going to be stable. Is that totally a bad thing? They want a business that’s going to be in here for the long haul,” she said.

-Alice Walton

MGA Entertainment breaks ground in Chatsworth

Los Angeles Daily News

 

Van Nuys’ loss is Chatsworth’s gain. And it’s a big one. Bratz is moving into the neighborhood.

The long awaited move by MGA Entertainment, creator of the popular Bratz doll is finally happening and Chatsworth is getting something it doesn’t have — a mixed use development that has become popular in other parts of the San Fernando Valley.

MGA broke ground Friday at the 24 acre former Los Angeles Times printing facility.

The development will include housing, something missing from this part of Chatsworth where light manufacturing, warehouses, offices and retailers are the norm.

The project at 20000 Prairie Street along the east side of Winnetka Avenue is being built by Santa Monica-based UNCOMMON, a real estate company founded by Jason Larian and Ryan Hekmat,

And the project is a family affair. Issac Larian is MGA’s CEO, Jason is his son and Hekmat is his son-in-law. They are planning to put more than $150 million into the project.

MGA, which has about 300 employees, bought the property 10 years ago and said then it wanted to move to Chatsworth. But that plan got derailed when the company and Mattel became embroiled in a court battle over trade secrets. The case was settled three years ago with both sides claiming victory.

The Los Angeles City Council approved the development plan in February. City Councilman Mitchell Englander believes this will be a good addition to the community.

“I’m jazzed about it. It’s just the beginning of Chatsworth becoming a tech sector,” he said.

There was no local opposition to the project, something rare for a development of this size.

The company is calling the development “24” and bills it as the next generation of the live/work/play campus concept.

It “will virtually transform the under-served neighborhood of Chatsworth into an interactive hub of work and recreation for residents, tenants and the community,” the company said in a statement.

The project includes 660 luxury residences, 255,000 square feet of creative office space, dining and retail options and production studios.

“24 will be unlike any other apartment or office building in the nation with a wealth of amenities that combine personal, professional and cultural resources in one cohesive destination,” said Jason Larian in a statement.

Amenities include a fitness center, an amphitheater and a “village green” with an outdoor cinema to host public concerts and movie screenings.

A trail is also planned along the perimeter of the property along with an exercise path.

The project is being designed by the Santa Monica-based architectural firm KFA.

So it looks like Chatsworth is the latest community to get its own village.

-Greg Wilcox

The Birth of the New Live-Work-Play Campus

GlobeSt.com

 

If we could peer into the future, we may see that live-work-play communities aren’t built around a submarket or neighborhood, but are a single campus with a residential, office and retail all in one place. At least, that’s the future that developer Uncommon sees. It has just broken ground on 24, a live-work-play campus in Chatsworth, and it believes that the project will be the first of many live-work-play campuses where residents work and “play” onsite. 24 is a 660-unit luxury property with 255,000 square feet of creative office space, dining and retail and a full range of amenities on a multi-acre campus designed by KFA. To find out more about the property and the evolution of the live-work-play community, we sat down with Jason Larian, co-managing partner at Uncommon, for an exclusive interview.

GlobeSt.com: What is your vision for 24?

Jason Larian: Our vision for 24 is about enhancing the lifestyle of our residents and tenants.  We believe the sum of the parts of the project is greater than the whole, so each component of 24 was designed to address the stresses and opportunities of each day.  For example, residential tenants can work nearby, eliminating their commute; run their errands in the retail plaza; and walk their dogs at the dog park.  Our office tenants can relax by taking leisurely walks in nature, enjoy al fresco picnic lunches, and visit the gym after work onsite.  And the surrounding community can attend cultural events like concerts and movie screenings designed to connect and entertain. We also achieve this vision with thoughtful site design making sure that each building and activation point is connected through a series of walkways filled with activities in every corner.

GlobeSt.com: This is another iteration of the live-work-play environment. Do you imagine that the future tenants will live and work within the complex?

Larian: We anticipate that a large portion of future tenants will live within the complex. In fact, we are working with our anchor tenant, MGA Entertainment, to provide first choice to their employees for any units that would be built on the property, as well as preferential rental concessions for employees for added incentives. Many of our tenants are current employees who commute over one hundred miles each day. Being able to live in a brand new community with luxury living quarters walking distance from work is a huge draw for them.  We will use a similar model with anchor office tenants at future iterations of our live/work/play campuses.

GlobeSt.com: Do you think this is the future of live-work-play communities in a campus setting?

Larian: Very much so. We also achieve this vision with thoughtful site design, making sure that each building and activation point is connected through a series of walkways filled with activities in every corner. Most live-work-play campuses don’t do a very good job connecting the people living and working on campus. We are going the extra step of programming the spaces with activations and special events, which foster community

GlobeSt.com: What is the market for this type of property in Chatsworth?

Larian: The market for this type of property in Chatsworth is strong. We see a large push for campus style work environments within the surrounding area. For example, Respawn Entertainment has moved across the street from us in their own complex. Chatsworth is one of the few places with enough land to build such a property at an affordable price point that we can pass along to tenants.  It’s also a quiet, safe and beautiful area with beautiful nature surrounded by rolling hills and rocky landscapes that you cannot find in the urban core of Los Angeles.  Finally, it is relatively area close to communities with high net worth communities in the San Fernando Valley.  This makes for a perfect setting to create a campus that fosters creativity and connection at an accessible price point.

GlobeSt.com: How will this property inform your future development projects, and how is it different from your previous projects?

Larian: This is the first project of this kind for us, and it’s a culmination of years of design and development to make a campus that echoes our core values at Uncommon. Our approach stars with a vision, not a spreadsheet.  But all the planning and intention in the world cannot fully predict how the space will ultimately be used by its residents. I am personally excited to see the property come to life with people living and working there in ways that none of us could have anticipated. We plan to keep a dialogue with our residents and learn from their experiences. We’ll use these lessons in the conceptualization of future campuses we develop.

-Kelsi Maree Borland

Beverly Hills Retail Building Sells for $5,000/sf

RENTV.com

 

Sterling Organization has purchased a 4.7k sf retail building in Beverly Hills’ Golden Triangle shopping district, just one block east of Rodeo Drive. The property was purchased for $23.5 mil, or $5,000/sf, in an off-market transaction on behalf of the firm’s institutional fund Sterling Value Add Partners II, LP (“SVAP II”). The building is located at at 315-319 N. Beverly Dr, between Brighton Way and Dayton Way. It is expected to be vacant in the first quarter of 2017. The Golden Triangle is one of the country’s most desirable High Street retail districts, and N. Beverly Drive is home to a number of upscale retailers such as Club Monaco, Intermix, Lucky, Alice + Olivia, Theory, All Saints, lululemon, COS, Sandro, Crate & Barrel, Pottery Barn, Williams-Sonoma, AG Jeans, Z Galleria and Nespresso. Over 284,000 people live within a three-mile radius of the property, where the average household income is over $131k. Within a five-mile radius, the population exceeds 709,000 people and the average household income is over $116k. Beverly Hills’s Golden Triangle is also a major tourist destination within the greater Los Angeles area, which boasted over 45.5 million visitors in 2015. Sterling Organization, which is headquartered in Palm Beach, FL, can now count as part of its portfolio five assets in the western United States, four of which are in California. From coast to coast, Sterling Organization and its principals own almost 9 msf of primarily retail real estate exceeding $1.5 bil in value. The N. Beverly Drive property is the eleventh asset acquired through the firm’s SVAP II private equity fund.

-Staff

Historic Property in Downtown Los Angeles Sold for $24 Mil

RENTV.com

 

The Merritt Building in downtown Los Angeles was acquired by an international investor in a recent $24 mil transaction. Located at 761 S. Broadway (aka 301 W. 8th Street), The Merritt Building is a historic, multi-story 55.9k sf ($429/sf) building located in the heart of the vibrant SoBro (South Broadway) district in downtown. The Merritt Building is located on a 7.1k sf lot (±0.16 acres) on the northwest corner of Broadway and 8th St. The building was originally designed by the Reid Brothers in 1915 as a rendition of Minerva’s Temple sitting atop an ornate three-story base. In 1957, the building was purchased by the Home Savings & Loan Association, who covered many of the lower windows to create a grand entrance on Broadway.

The property as it stands today is a nine-story commercial building plus a basement level, currently only occupied by retail users on the ground floor. The interior, like its outer facade, boasts many original and unique architectural features, including intricate masonry, stained-glass skylights, and a bank vault.

The seller, LIZ, was represented in the transaction by Mike Condon Jr. and Kelli Snyder with Cushman & Wakefield.

“This well located, highly visible property offers tremendous potential opportunity from an investor perspective, and as such we were able to achieve favorable pricing on this unique trophy asset,” Condon noted. He also pointed out that any specific plans for the property’s future have yet to be determined and the new owner is currently weighing a variety of options.

Downtown Los Angeles is a transit-oriented and economically growing area that is quickly emerging as the cultural center of Los Angeles. Situated in the Historic Core, the neighborhood is ripe for redevelopment through the addition of the Los Angeles Streetcar, the revitalization of nearby Pershing Square, and the Bringing Back Broadway initiative aimed at reactivating Downtown’s historic stretch of theaters and commercial space.

Condon added, “The Merritt Building is located in downtown’s emerging SoBro district, an area poised to be one of the most influential driving forces in culture and entertainment for the city’s nighttime entertainment. The SoBro District has the highest concentration of boutique hotel brands, exciting new retail tenants and is poised for growth with mega redevelopment projects. This district really captures all the aspects of downtown’s live, work, play philosophy.

-Staff

Rise in original programming by Netflix, Amazon to boost fortunes of LA landlords: Hudson Pacific

The Real Deal

 

The rising tide of original online programming is lifting the fortunes of L.A. landlords.

Hudson Pacific Properties reported an 8.6 percent uptick in revenues in the third quarter, thanks in part to an increase in demand for space from the media and entertainment sectors.

Its total revenue was $164.6 million, up from $151.6 million during the same quarter a year ago. Revenue from its media and entertainment properties increased by 22.1 percent to $12.5 million year-over-year.

Hudson CEO Victor Coleman attributed a portion of the growth to the firm’s relationship with streaming and online video company Netflix, which recently inked a deal to lease multiple stages and production offices totaling 99,250 square feet at Hudson’s Sunset Bronson Studios in Hollywood. Netflix is also leasing the entire 323,000 square feet at Hudson’s  adjacent Icon office development on West Sunset Boulevard.

Netflix now accounts for a total 420,000 square feet in Hudson’s portfolio.

“All of our various deals with Netflix highlight the massive shift in content,” Coleman said on the third quarter earnings call, noting that AT&T’s prospective acquisition of Time Warner signals further industry realignment. “As a growing number of media companies spend billions to produce a pipeline of original content for streaming anytime anywhere, our studio ownership affords us unparalleled facilities and capabilities to participate in that growth.”

“By capitalizing on these industry shifts,” he continued, “we expect studio cash flow to continue to become increasingly predictable and digital office space even more valuable. This confirms our original investment thesis regarding the studios — that this is an element of our business with significant potential to grow.”

Coleman said he expects Hudson to be able to provide production space to other companies now dabbling in the content space, including Google and Amazon, as they build out their digital infrastructure, global branding and distribution.

Amazon has been developing its own shows, including “Bosch” and “Transparent” which are filmed in L.A. Netflix, which has original series hits like “Orange is the New Black,” also recently announced that it plans to have 50 percent of its content be original within 24 months.

“These streaming media companies don’t really own their own fiscal facilities or professional studios,” said Bill Humphrey, general manager at Hudson. “So they need to figure out a way to or use terminal warehouse space. They’re going to up the spending. All the other players around them are going to do the same. So the demand is continue to increase, the amount of supply on this side in LA in going to stay pretty stable so we’ll still be in a very, very strong position.”

-Katherine Clark

Brightstone Capital Partners and Artisan Realty Advisors Acquire Lantana Media Campus in Santa Monica, California

Yahoo! Sports

 

Brightstone Capital Partners, a global real estate investment management platform, and Artisan Realty Advisors, a Los Angeles-based real estate investment company, have formed a joint venture to acquire Lantana Media Campus in Santa Monica, CA, a four-building office campus totaling 478,713 square feet on approximately 12 acres.

The Class A property is located within the Santa Monica Media District in the heart of “Silicon Beach,” the area’s premier hub for entertainment, media, technology and advertising companies. Conveniently located along the recently completed Metro Expo Line, Lantana Media Campus offers a variety of building types suited to both large and small tenants, particularly those seeking a unique “creative office” campus environment.

“Santa Monica’s strategic location and amenity-rich environment make the area one of the top submarkets in Southern California,” stated Dennis Irvin, Douglas Lee and John Rivard, Managing Directors of Brightstone Capital Partners. “It is one of the most supply constrained markets in the country, making the acquisition of Lantana Media Campus an extraordinary opportunity for Brightstone and one that is consistent with our model of acquiring unique, high quality assets in advance of offering interests to our investors.”

The new ownership will embark on a comprehensive, multi-million dollar renovation program, ensuring that Lantana will meet the standards of even the most discerning creative companies. Planned upgrades to the property include fresh, contemporary approaches to the lobbies, elevators and restrooms, as well as new enhancements designed to activate and energize interior private courtyards and the addition of a robust, on-site amenity package.

“As the new stewards of this appealing property, our goal is to create a world-class media campus in Santa Monica,” said Mark Laderman and Collin Komae, Co-Founding Partners of Artisan Realty Advisors. “Today’s top creative people seek a work environment that maximizes the potential for collaboration and is also highly amenitized. We are confident that Lantana will increasingly be their new location of choice.”

Los Angeles-based Mesa West Capital provided the acquisition financing, with a portion of the loan proceeds to be used for capital improvements and leasing costs. Steve Fried and Jason Bressler represented Mesa West.

-Staff

Daily Brief November 07, 2016 unsubscribe

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