L.A. Close-Up
Sep 1, 2008 12:00 PM, By Patricia Kirk
Figueroa Plaza mall's owner, New York-based Brookfield Properties, plans to renovate the Macy's-anchored, three-level, subterranean center. It also plans to retenant the property, adding national retailers and high-end specialty boutiques.
However, Scarlett Williams, a broker with Grubb & Ellis, says, “Construction delays are worrying a lot of retailers who had planned to expand into downtown. There's … some hesitation.”
Williams notes that retail vacancy varies by district, from less than 5 percent in the Financial District up into the teens for the emerging historic and theater districts, which still have some less than desirable areas. Marcus & Millichap's vice president for investments in Los Angeles, Chris Maling says the slowdown in the retail transactions reflects the national economic downturn in response to retailers closing stores and abandoning previously announced expansion plans.
Hollywood and Vine
Hollywood is rocking for retailers who have seen an increase in purchases by foreign tourists benefiting from the weak dollar and an influx of new residents to the area.
The transformation of Hollywood to a 21st-century update of its star-studded past from a seedy, crime-infested area involved restoring tourist landmarks like El Capitan Theater, the Roosevelt Hotel and Grauman's Chinese Theater. The revitalized Hollywood is also drawing local professionals and craftspeople who work in the entertainment industry. Evidence of the renaissance is people seen working on laptops in cafes day and night, says Jose' Malagon, a Hollywood property owner and vice president of the Hollywood Entertainment BID.
Whole Foods Market is planning a flagship-size store near Hollywood and Vine. Nearby, Philadelphia-based Urban Outfitters has plans to introduce a new retail concept and relocate its corporate headquarters. Adidas is moving its Celebrity Store from Santa Monica, Calif., to join an array of Hollywood boutiques that cater to a celebrity clientele.
The influx has improved the area's profile, piquing the interest of national and international retailers, notes Jeff Kreshek, principal in charge of leasing for locally based CIM Group, owner of the one-million-square-foot Hollywood & Highland retail-entertainment center, venue for the Academy Awards.
CIM acquired Hollywood & Highland several years ago and retenanted the 687,000 square feet of retail space with retailers including Guess, Lucky Brand Jeans and Louis Vuitton. It also acquired a number of storefronts along Hollywood Boulevard and is retenanting with a mix of fashion, dining, and entertainment. By owning a multitude of properties, Kreshek says, CIM was able to implement a merchandising strategy, which located fashion retail on one block and necessity retail on another.
Large East Coast players are entering the market, notes Carl Muhlstein, a broker in the Los Angeles office of Cushman & Wakefield. CIM was the pioneer, but now Apollo Real Estate, Commonfund, Broadreach and the Clarett Group are doing multimillion-dollar deals.
Projects in development will add more than one million square feet of new retail space, including 61,500 square feet at Hollywood and Vine, which includes a W Hotel & Residences and apartment complex by Gateway Capital and Legacy Partners; a 60,000-square-foot Whole Foods Market on the ground level of a $225 million, 300-unit apartment complex by Camden Property Trust; 175,000 square feet at Boulevard 6200, a $350 million mixed-use project by Clarett Hollywood LLC; and a Target. Hollywood Chamber President Leron Gubler says, “There's enthusiasm in the area now, things are improving, and in five years this area will probably be hot.”
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