Rodeo Drive might be the toniest shopping district in Beverly Hills, but lately it’s nearby North Beverly Drive that has investors and tenants clamoring for space.
Last month, Chicago real estate investment firm L3 Capital sold two retail buildings on the street to New York real estate investment company RREEF for a combined price of $35.5 million. L3 had purchased the buildings two years ago for significantly less – about $19 million.
Both buildings, at 350-354 and 408-410 N. Beverly, were fully leased at the time of the sale. In fact, L3 signed long-term leases with several upscale fashion retailers to populate the storefronts earlier this year, including Theory, Alice + Olivia and Maje.
The two-building sale follows a $27 million deal L3 also made last month to sell a retail property at 145 N. Robertson Blvd. to New York real estate company Thor Equities.
Greg Schott, co-founder and managing principal at L3, said the company initially bought the property because it had a lot of upside potential. L3, which invests in urban retail properties nationwide, typically tries to turn around purchased properties in fewer than five years.
“L3 Capital stands for location, location, location,” he said. “And from a location standpoint, these properties were great,” he said.
The company renovated the buildings, including building out new facades. Before construction began at 350-354 N. Beverly, the company bought out Beverly Hills Beauty Center, a tenant that Schott said had been paying well below market lease rates.
He said lease rates average between $15 and $17 a month on North Beverly, down from a peak of a little over $20 before the recession but far above the $10 low that some landlords agreed to when the economy tanked.
“I think (the sale) is an affirmation of the power of Beverly Hills – not just Rodeo Drive, but other neighboring streets,” he said. “On Beverly Drive, you can justify the rents that are being paid.”
Shopping Sale
After several unsuccessful attempts during the last few years to sell a Santa Clarita shopping and entertainment center, Bay Area developer Concept Centers finally made a deal with a group of Southern California investors.
The Soledad Entertainment Center at 18740-18842 Soledad Canyon Road, on the market for six months at an asking price of $18.5 million, sold Sept. 27 for $18 million to limited liability corporation Soledad Entertainment, according to real estate industry sources.
Concept Centers, based in Tiburon, built the 58,000-square-foot retail center on 9.1 acres in 1998. The center is anchored by an Edwards Theatres multiplex. Union Bank and Oggi’s Pizza also take space in the center, which was about 88 percent leased at the time of the sale.
David Kram, vice president of San Francisco brokerage firm Arroyo & Co., represented the buyer and seller in the deal. He said the seller had previously worked with other brokerage firms before signing a contract with Arroyo. The challenge was finding a buyer willing to accept a center without a grocery store.
“It was a tough transaction because there haven’t been many specialty shopping centers like this trading hands,” he said. “I think it was just a function of the economic downturn. Buyers have all been looking for the same thing: They all want grocery-anchored shopping centers.”
Kram said the group of investors that bought the property, who were familiar with the Santa Clarita real estate market, were confident in the upside potential of the retail center.
Pedro Arroyo, chief executive of Arroyo, was also involved in the deal.
Project Management
The city of West Hollywood last week selected Heery International, an Atlanta architecture, design and engineering firm, as its representative during construction of the largest project undertaken in the city’s 30-year history.
The Sunset La Cienega project, formerly referred to as Sunset Millennium, is being developed by Hollywood’s CIM Group Inc. Once completed, the project will include two 10-story hotel towers and two eight-story condominium towers, all with ground-floor retail plazas. In the demolition phase, construction is expected to last two years.
Dan Adams, a project director with Heery who will lead the firm’s effort with the city, said an outside consultant was hired to monitor the project because it had passed through the hands of a number of developers who had agreed to various conditions before moving forward.
One of the conditions, he said, “was that the developer would have to finance the city hiring somebody to look out for the city’s interest.”
Staff reporter Bethany Firnhaber can be reached at [email protected] or (323) 549-5225, ext. 235.
