Prices for Prestige Homes Falling, But Only Slightly

Real Estate

by Danny King

The upper end of the housing market may be showing signs of cooling off, according to a report by San Francisco-based First Republic Bank.

In Los Angeles County, the average values of what First Republic terms a “prestige home” was $1.3 million at the end of the fourth quarter, down 1.3 percent from the third quarter, and marking the first quarter-to-quarter decrease in over two years. Fourth quarter prestige home values were still 8.3 percent above year-earlier figures.

January median home prices fell from a year earlier in tony communities like Bel Air, Malibu and Pacific Palisades, according to San Diego-based DataQuick Information Systems.

“Does it surprise me at all that you’d see a decrease in luxury home values? No,” said Robert Bailey, president of California Association of Realtors. “There aren’t the discretionary dollars out there that there was before.”

Still, Bailey believes the slide was an aberration, and that with a shortage of inventory and without another Sept. 11-like disaster, positive home value growth, even on the high end, should resume this quarter.

“I wouldn’t see runaway price appreciation but I would see steady appreciation,” said Katherine August-DeWilde, First Republic’s executive vice president, noting that the low inventory throughout Southern California applies to the upper-end as well.

And if the market has softened, Jeff Hyland, president of Beverly Hills-based Hilton & Hyland Real Estate, said he hasn’t felt it. “The entire market is up,” said Hyland, whose firm specializes in luxury homes. “What comes on the market sells right away.”

Media Moves

In an era when many media companies are cutting back as a result of declining advertising revenues, the Miracle Mile office of one publishing company is going in the other direction.

Hachette Filipacchi Media signed a five-year lease for 12,500 square feet at 5670 Wilshire Blvd., headquarters of ArtistDirect. Total consideration on the deal, which marked a 25 percent increase in space occupancy for the firm, was $1.6 million.

“They’ve got a lot of stable magazines that have been around for a very long time,” said Rosey Miller, senior managing director at tenant representative Julien J. Studley Inc. “Their core magazines are doing well.”

The 410,000-square-foot building is about 80 percent leased, according to Insignia/ESG Inc. associate Jake King, who, with Chris Houge, represented landlord J.H. Snyder Co. in the deal. Other recently signed deals at the building include leases for Coldwell Banker Residential and law firm Gemmill Thornton & Baldridge.

Hachette Filipacchi, which is headquartered in Paris, publishes magazine titles such as Car and Driver, Elle and Woman’s Day.

Flax into Gold

One of Westwood’s oldest businesses apparently has given up on redeveloping its property and is putting it up for sale. But then again, maybe not.

The Flax family, owner of Flax Art Supplies at 10852 Lindbrook Ave., has listed its 8,400 square-foot building for sale, according to Reginald Woolfolk, broker at Charles Dunn Real Estate Services Inc. Sale price is listed at $3.5 million.

But storeowner Judy Flax was noncommittal on the status on the property. “It was listed and we’ve just changed our mind,” said Flax. “Everything is up in the air right now.”

The family’s redevelopment proposal of a mixed-use project, which included 29 apartments on the quarter-acre site, was met with opposition from Westwood’s Design Review Board in December.

“We told them to go back to the drawing board,” said Terri Tippit, the board chairwoman, who noted that the design overwhelmed the site and that the board was looking for more setbacks and less mass. The Flaxes had not scheduled a date to re-approach the board for an updated design proposal, according to Tippit.

The family has also begun discussions with the owner of a 2,800-square-foot retail location on Gayley Avenue just north of Kinross Avenue about moving the 50-plus-year business, complete with its huge trademark blue-and-red ribbon sculpture on its fa & #231;ade.

“I am very much looking forward to bringing the sculpture to Gayley Avenue,” said the building’s landlord, Ben Pick.

Flood of Trouble

A low-income housing complex in Boyle Heights turned out to be an expensive proposition for one team of residential contractors.

Rio Vista Associates, a general partnership managed by L.A.-based general contractor Parker Industries, as well as a group of subcontractors on the project, agreed to a $13.7 million settlement stemming from extensive water damage attributed to the construction of a 75-unit development at 1300 Rio Vista Ave.

Negotiations on the Feb. 20 settlement, which was reached the morning the dispute was scheduled to go to trial in Los Angeles Superior Court, had been taking place for about eight months, according to defense counsel Louis Chao, partner at Los Angeles-based Sabaitis Callaghan LLP.

Many of the apartments of Rio Vista Village, which was funded by Long Beach-based nonprofit developer Retirement Housing Foundation and was built for $9.7 million in late 1996, began experiencing flooding during the El Nino winter of 1997.

The flooding and resulting damage to both the units and possessions of its inhabitants was ultimately attributed to faulty drainage systems that redirected roof water back into the units as well as bad waterproofing and deck design. Three of the units have been deemed “unlivable” and are now empty, according to plaintiff counsel Timothy Reuben, managing principle at Beverly Hills-based Reuben & Novicoff.

“The damages included not just the cost of repair, which is about $8 million, but relocation costs and lost rent, as well as mitigation costs and attorneys fees,” said Reuben.

Still, the cost to the defendants, which also included architects Leidenfrost/Horowitz & Associates and structural framers Unimax Construction as well as about a dozen other subcontractors, could have been worse, said Chao.

“Their damage claim increased to more than $20 million,” said Chao. “We realized we were going to be in big trouble if we didn’t settle early.”

Staff reporter Danny King can be reached at (323) 549-5225 ext. 230, or at

[email protected].