Los Angeles Business Journal

Fred Segal Inks Lease for Sunset Strip

By Daina Beth Solomon Originally published December 19, 2016 at 7:04 a.m., updated December 19, 2016 at 4:53 p.m.

High-end retailer Fred Segal has signed a lease for 22,000 square feet in a new residential building on the Sunset Strip, bringing an iconic fashion name to a part of West Hollywood better known for its clubs and nightlife.

CIM Group, the building’s owner, said in a statement that the lease is long-term and that the space at Sunset and La Cienega Boulevards will include a café, restaurant, gym, salon, florist, and wine shop, as well as a collection of numerous boutique apparel brands.

The store is slated to open in fall of next year, Fred Segal said in a statement.

At the same time, an expansion plan for Fred Segal in Playa Vista has been axed. According to several sources familiar with the company, Fred Segal, owned by New York-based Sandow, in recent months pulled out of a lease for 20,682 square feet at the Runway Playa Vista mixed-use development.

"While Fred Segal continues to believe in Runway Playa Vista as a transformational lifestyle development, we have shifted our focus to other projects for 2017," a company spokeswoman said in an email.

Fred Segal’s only other L.A. outpost is a 2,200-square-foot shop inside the Los Angeles International Airport. It also operates sites in Tokyo and Yokohama, Japan. The brand shuttered its long-operating Santa Monica location last March, and, in the same month, broke ties with its original site on Melrose Avenue in Beverly Grove when the building sold to a Canadian investor group. Sandow is now suing the new owners over the Fred Segal signs that it retained on the building, alleging trademark infringement.

A location in the SLS Las Vegas hotel opened in 2014 but closed last year.

The store shuffle comes as Sandow is four years into revamping the Fred Segal brand, which it bought from Fred Segal and his family in 2012.

The West Hollywood site will fill roughly half of the retail space at CIM’s building, dubbed 8500 Sunset, which is still under construction. When completed, it will offer 190 residential units in a pair of eight-story towers. Across the street, CIM is building two more towers, each with 10 stories, which will house the James West Hollywood hotel with 286 rooms.

The developments are part of an ongoing West Hollywood construction boom that will bring more than 758 hotel rooms and 254 residences to Sunset Boulevard, along with new retail space.

About 22,000 square feet of retail space at 8500 Sunset is still available for lease, according to CIM.

“The cache of Fred Segal is attractive to other retailers that want to locate adjacent to the popular destination,” said Shaul Kuba, a CIM principal, in a statement.

Putting Fred Segal into the mix could set the tone for other stores to follow, said Shaul Kuba, a CIM principal.

“The cache of Fred Segal is attractive to other retailers that want to locate adjacent to the popular destination,” he said in a statement.

Jay Luchs, an executive vice president at Newmark Grubb Knight Frank, represented both CIM and Fred Segal in the deal. He said Fred Segal appreciated the chance to plant a flag in West Hollywood at a time when the Sunset Strip is seeing its first major construction in 30 years and is poised to attract well-heeled clientele with boutique hotels and shopping.

“You’re probably going to have a more art and fashion street than anyone would ever have imagined,” Luchs said. “It’s an incredible place to showcase who you are as a brand.”