Developers of a proposed luxury hotel in Beverly Hills found success at the polls and last week won a court challenge. But the project still faces hurdles.
While upholding environmental studies for a new 214-room Montage Hotel, Los Angeles Superior Court Judge David P. Yaffee also opened the door for additional legal challenges.
Its developers, the Athens Group, had argued that a referendum passed by voters should shield the project from further litigation. But Yaffee disagreed, since the Montage project “was initially approved by the City Council, not the voters,” he wrote in his ruling.
The proposed luxury hotel, at Wilshire Boulevard between Beverly Boulevard and Ca & #324;on Drive, would be operated by Montage Hotels & Resorts LLC and contain 25 condominiums.
While the hotel would be built on private land, its underground parking and an adjacent park would be on a city-owned lot to be leased to the developer.
The Beverly Hills Residential-Business Alliance for a Livable Community had filed suit against the city for approving what it has labeled “sham” environmental studies that support the hotel’s construction. At the same time, the group a mixture of homeowners, civic groups and businesses also collected enough signatures to put the hotel’s construction on the March ballot, where voters narrowly approved the project.
When the lawsuit came to trial, the city claimed that the referendum, Measure A, made the alliance’s claims moot since voters had given their blessing. Yaffee said that contention “had no merit,” and that the referendum doesn’t protect the city from further scrutiny.
The judge didn’t go easy on the alliance either. It had argued that the city had approved a faulty EIR because it didn’t take into consideration a planned three-story medical office building next door to the Montage site.
The group also said the city’s environmental study used traffic comparisons from another luxury hotel after 9/11 when occupancy was low and no special events were being held. Yaffee ruled against both arguments.
“The ruling is a complete validation of the project from a legal standpoint,” said Jay Newman, Athens’ chief operating officer. “The project has passed with flying colors every possible challenge and hurdle placed in front of it.”
Robert P. Silverstein, a partner at Hill Farrer & Burrill LLP who is representing the alliance, said he is talking to his clients about the possibility of appealing the decision.
Outside of court, Athens Group is pushing forward with design plans and Newman said he expects the company to break ground on the project within a year.
There’s now a waiting list with “a few hundred people” interested in buying, Newman said. Athens expects to get some of the highest per-square-foot prices in Southern California for the units, which will be some of the few residences in the city’s tony Golden Triangle and will come with hotel amenities. Asking prices for the units, which will range in size from 1,200-5,000 square feet, will likely be well over $1,000 a foot.
“There’s a tremendous amount of pent-up demand for this location in the heart of Beverly Hills and this kind of experience, which is really hotel living,” Newman said.
Several potential buyers have offered to put down deposits, but the developer can’t accept those until the project gets certain approvals from the California Department of Real Estate.
Other potential buyers want several units so they can combine them to make bigger condos.
Sanwa for Sale
With a large chunk of space likely to be vacated next year, the owners of 601 S. Figueroa St. are putting the 1 million-square-foot office tower, formerly called Sanwa Bank Plaza, on the market, according to sources close to the deal.
Hines and its partner, Deutsche Immobilienfonds, or DIFA, have hired Secured Capital to market the property, the sources said. The owners want about $400 million, or $385 a foot, for the building, now called Figueroa at Wilshire.
Calls to Secured Capital and Hines weren’t returned.
The sale comes about a year before the expiration of the lease held by Bank of the West, which purchased Sanwa Bank. Bank of the West likely will not renew the 220,000 square feet it takes in the building. The building’s current vacancy rate is lower than downtown’s average of 17.8 percent.
Tenant representatives say leasing the space could be difficult because of intense competition for tenants at Thomas Properties Group Inc.’s City National Plaza and Maguire Properties Inc.’s Wells Fargo Plaza.
Still, with prices for downtown office buildings soaring, investment brokers believe the $400 million price is likely attainable.
Hines, along with Mitsui Fudosan, developed the 1 million-square-foot property, with its distinctive octagonal glass crown. The building has some of the highest rents in downtown L.A.
Growing giant
For the 12th time in a decade, law firm Quinn Emanuel Urquhart Oliver & Hedges LLP has increased the amount of office space it takes in the TCW building in downtown L.A.
The law firm which has some of the highest profits per partner in Southern California inked a deal adding 45,000 square feet to the 121,000 feet the company already takes in the building.
The expansion is for nine years and valued in excess of $10 million. The law firm is taking space that was vacated by the California Department of Transportation when its new regional headquarters building was completed.
Quinn Emanuel opened its original 30,000-square-foot office in the building in 1994, and since then has grown by more than 500 percent.
Quinn Emanuel now takes more space downtown than all but five other law firms, according to Steven Bay, a CB Richard Ellis Inc. executive vice president who has represented the firm since it entered the L.A. office market.
“That’s pretty remarkable growth in just over 10 years,” he said.
Along with Bay, CBRE’s Clay Hammerstein represented Quinn Emanuel in the expansion. Landlord Manufacturers Life Insurance was represented internally.
*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
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