Old Tire Centers to Make Way for Retail Developments

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Old Tire Centers to Make Way for Retail Developments

Real Estate

by Danny King

Two tire stores are rolling out of a four-block stretch of Wilshire Boulevard in Santa Monica, and two retail developments are expected to take their place.

The site of a Goodyear Tire Center at Wilshire Boulevard and 12th Street was sold to a West Los Angeles-based developer who is looking to redevelop the 30,000-square-foot parcel as a mixed-use property, which will include 7,500 square feet of retail space. The buyer, Signet Corp., paid in excess of $3 million for the property.

Goodyear is one of two tire stores that will be shuttered by this fall, according to May Realty Advisors President Matthew May, who represented both the buyer and the seller, Regency Corp. At 1610 Wilshire Blvd., Just Tires’ lease is up in September and the property owner wants to develop the site for big-box retail.

Additionally, Wilshire West Detail & Car Wash’s owners are expected to redevelop the block-long site at 2320 Wilshire Blvd. within the next couple years, according to May.

“Goodyear was paying $2,000 a month (for its long-term lease that ran out last year), and this site would rent out at $25,000 a month,” said May. “The margins just aren’t there.”

Strouds to Move

Home d & #233;cor retailer Strouds is itself moving into new digs.

Strouds Building LLC, an affiliate of Strouds Acquisition Corp., purchased a 159,000 square-foot-building at Plantation Business Park in City of Industry for $9 million, and will be moving from its Nogales Street headquarters in June.

The purchase allows Strouds to consolidate its three City of Industry operations totaling 190,000 square feet into one operations and distribution center. The move also signals progress for a 23-year-old company that was brought out of bankruptcy for $39.5 million last spring.

“It’s a new company and it’s time for a new building and new image,” said Julien J. Studley Inc. Managing Director David Y. Cantwell, who represented Strouds on the deal.

Strouds will add 25,000 square feet of mezzanine offices to the structure, which was completed 14 months ago and has never been occupied.

The new site was the last building completed at the 10-building, 2-million-square foot Plantation Business Park, which was developed by Anaheim-based Koll Development Co. during the last two years. All the buildings have been either purchased by owner-users or leased, according to Lee & Associates’ Chris Bonney, who represented the seller, Ringwood Avenue Properties LLC.

Blindsided

SeeBeyond Technology Corp. may have been shortsighted when it came to its headquarters relocation needs.

At the end of 2000, the Monrovia-based software producer signed a 10-year deal to lease 80,000 square feet in the Monrovia Technology Campus at Huntington Drive and Mountain Avenue, two miles away from its existing digs.

But as business conditions improved throughout last year, company officials concluded that the space would be insufficient. So last month SeeBeyond signed a 12-year lease for an additional 40,000 square feet at the new location. The lease on the initial 80,000 square feet was extended two years to match the new deal.

Financial terms were not disclosed, but real estate sources in the San Gabriel Valley estimated total consideration in excess of $25 million.

“In their industry, everybody was hiring like mad, then came the cost controls,” said CRESA Partners Principal Douglas A. Econn, who along with Gerald Porter represented SeeBeyond in both deals. “But they went profitable for the first time last quarter, and they realized they needed more space.”

SeeBeyond, which went public in April 2000, reported net income of $1.6 million for the fourth quarter ended Dec. 31, compared with a net loss of $6.2 million in the like year-earlier quarter. Fourth-quarter revenues were $44.1 million, vs. $42.7 million in the fourth quarter of 1999.

Monrovia-based developers Samuelson & Fetter broke ground on the newly built campus after securing SeeBeyond’s first lease. The company will be the first tenants at the location; the first two phases of development will total 265,000 square feet when built out.

The SeeBeyond deals reflect a tightening San Gabriel office market, exacerbated by a scarcity of new buildings in the area, said Nico Vilgiate, who leases commercial space in the area. The San Gabriel Valley office vacancy rate was 12 percent in the fourth quarter, down from 16 percent in the like-year earlier quarter, according to Grubb & Ellis.

“Monrovia has done very well with technology-based companies,” said Vilgiate, director at Insignia/ESG.

Flatlines

Rental inflation throughout Los Angeles County is expected to decrease slightly this year, as the southern part of the county and West Los Angeles experience rising vacancy rates, according to a new forecast by multi-family broker Hendricks & Partners.

The most pronounced flattening will be in West L.A., where rents are expected to increase 4.5 percent from last year, compared with a 6.4 percent increase in 2001 and a 13.4 percent increase in 2000. The region will also have a 5 percent vacancy rate, marking the fourth consecutive year vacancies have risen.

“You can probably show a condition where rents will plateau we’re starting to see that now,” said Dean Zander, an associate partner at Hendricks. Landlords with luxury units ($1,500-plus for a one-bedroom) will begin making concessions like free rent to attract or keep tenants, he said.

Offsetting the exodus of renters to starter homes will be rising interest rates, which will help take slack out of the mid-range apartment market, Zander predicted.

The strongest market will continue to be the north part of the county, which includes the San Fernando and Santa Clarita Valleys. North Los Angeles’ vacancy rate will drop to 4.5 percent this year from 4.9 percent last year.

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

[email protected].

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