The space at 5665 Wilshire Blvd. became available for the first time in 20 years, and Staples swooped in, signing a lease for an undisclosed price.
Staples will relocate from its space in a Streamline Moderne building down the street.
At roughly 19,450 square feet, the size of the new location was a big draw for Staples, said Kennedy Wilson’s Lee Shapiro, who represented the landlord in the lease. The contemporary building also features 18-foot ceilings, parking and a dedicated truck loading dock.
Epsteen & Associates’ Vic Montalbo represented the tenant.
“What was really unique about this particular property, the sizing was larger than a traditional store. … It had about 5,000 extra square feet (compared with other retail properties in the area) which is what junior boxes look for. It’s a beautifully designed open plan with very, very high ceilings,” Shapiro said.
He added that the building’s 70-space subterranean parking garage was a huge plus as it allows for plenty of parking for employees and customers.
It also has dual elevators from the parking level into the store.
The Miracle Mile area has traditionally had a lot of office tenants, but during the Covid-19 pandemic vacancy has increased.
In the first quarter, the vacancy rate in the submarket was 19.6% compared with 16.9% two years prior, according to data from Jones Lang LaSalle Inc.
“It’s affected this market like it has many. That particular submarket has, in addition to just the office population, in the last 15 years has had a growth of vertical housing,” Shapiro said. “The area has definitely changed over the last decade and a half with more stability and customer base.”
Developers like Jerry Snyder and Walter Marks have been big in the area, as well as others adding more multifamily units to the area.
“That has helped many of these businesses survive among Covid times,” Shapiro added.
As a result, Shapiro said, interest in some of the sites in the area has been strong.
“There’s a quick turnaround for tenancy in that area historically,” he said.
That level of interest was there for the 5665 Wilshire Blvd. location despite the pandemic.
“Retail expansion was slowing down, but this was a unique opportunity for the larger retailers to establish themselves … in an iconic building and location that does not come up very often,” he said.
He added that the landlord received multiple offers from tenants interested in the property and were able to choose “who was most suitable in the long term.”
In areas where there is less leasing activity, many landlords have been offering reduced rent or concessions. Concessions could include things like free rent, reduced parking rates and tenant improvement allowances.
In the case of the Staples lease, Shapiro said “there was so much demand that ownership did not have to offer concessions beyond what’s customary for leasing of box retail.”
Shapiro added that stores like Staples may have longer leases in the range of 15 to 20 years, compared with other retail tenants who may sign leases closer to five years.
This, he said, keeps the prices stable.
“When product comes up during times of crisis … the big-box tenants are looking at a quarter century of time horizons,” Shapiro said. “The opportunity when the building comes up, even if it is in a time of crisis, is less important. They are looking at long-term sales.”
