Residential developers continue to flock to downtown L.A. The latest publicly held homebuilder going urban is Lennar Corp. Last week, Lennar established a partnership with LNR Property Corp. to purchase the last developable parcel next to Staples Center for about $80 million from Anschutz Entertainment Group, according to sources close to the deal. The 4-acre parcel is bounded by Figueroa, Flower, 11th and 12th streets.
Lennar, which teamed with LNR in 2003 to buy Newhall Land and Farming Co. for $990 million, would build three condominium towers in conjunction with a 250,000-square-foot retail center planned for the site.
Michael Roth, an AEG spokesman, confirmed that the company was working on a deal with LNR Property. “AEG is currently in discussions,” Roth said. “However, our policy is not to comment on specifics of negotiations.”
The Lennar deal comes on the heels of Bloomfield, Mich.-based Pulte Homes Inc. buying a 2-acre surface parking lot at the corner of Second and Rose streets in Little Tokyo.
Pulte, the nation’s second-largest homebuilder, plans to convert the site’s entitlements for an office tower to a six-story condominium with 210 units.
Several real estate sources also said that Los Angeles-based KB Home is hunting around downtown for the site of a showpiece condominium tower.
In Orange County, Lennar plans to build up to 11 residential towers in Anaheim, near Angel Stadium, according to the Orange County Register. One of the project’s towers, a 35-story building, would be the county’s tallest residential high-rise.
LNR’s Staples Center acquisition still has some unresolved sticking points. While AEG already has entitlements for the land, LNR Property may require city approval for additional housing to make the deal pencil out. Without the extra entitlements the deal could fall apart, the sources said.
AEG, majority owner of the Staples Center, has been planning a $1 billion entertainment and retail complex surrounding the arena. The district would include a 1,200-room hotel, a 7,000-seat live theater, radio and television broadcast studios, a nightclub and several restaurants.
As part of the district, approved by the city council in 2001, AEG also received entitlements for more than 2,000 units of rental and for-sale housing
L.A. City Councilwoman Jan Perry, whose 9th District includes the Staples Center site, said she would like to see more agreements to build affordable housing in exchange for housing. “There is a market, a strong market, for the construction of affordable housing,” Perry said.
Jason Glasgow, with the L.A. office of land brokerage O’Donnell/Atkins, represented LNR Property and Pulte Homes. Glasgow referred calls to LNR Property executives. They were not returned.
Record Setter
Richard Muerelo, downtown’s largest landowner, is buying a 30,000-square-foot parcel at the northwest corner of Ninth and Flower streets from CIM Group Inc. for about $17.4 million.
At that price, the deal works out to nearly $575 a foot the highest per-foot price so far paid for entitled land in downtown L.A., according to Mark Tarczynski, a first vice president at CBRE.
Tarczynski didn’t work on the deal but sold the parcel in December 2001 to CIM Group for $89 a foot.
The majority of the funds used by CIM Group to buy the property came from the California Public Employees Retirement System. Calpers is also supplying the majority of money being used by Muerelo to buy the parcel.
John Given, a CIM Group senior vice president, declined to comment. Calls to Muerelo weren’t returned.
Hanover Development Co. set the previous benchmark by agreeing to pay $432 a foot for a 17,370-square-foot lot at the northeast corner of Figueroa Street and Olympic Boulevard. Tarczynski represented Hanover in the deal, which is expected to close in August.
After buying its parcel, CIM Group received approvals from the city to build a 217-unit condominium building at the site, which is now a surface parking lot. Under those entitlements, Muerelo is paying $80,000 per unit for a project where finished condominiums are expected to sell for more than $500 a foot.
In recent months Muerelo has been hiring a development team to begin work on several of his downtown projects.
The condo will be across the street from CIM Group’s Ralphs supermarket development. Richard Plummer, senior director at Cushman & Wakefield Inc., represented Muerelo. CIM Group was represented internally.
Brand-New Listing
CB Richard Ellis Investors, a division of the brokerage CB Richard Ellis Inc., has put a large Glendale office building up for sale.
CB Richard Ellis Investors is selling the 15-story white-and-black checkered property at 505 N. Brand Blvd., according to Tom Bohlinger, a CBRE senior vice president who has the listing.
The 338,310-square-foot building, which opened in 1992, is 84 percent leased, said Bohlinger, who declined to name an asking price.
However, several brokers familiar with the property believe CBRE could fetch as much as $115 million. Asking rents are between $2.45 and $2.55 a foot, according to commercial real estate tracking firm CoStar.
At the end of June, Glendale’s office buildings were, on average, 14.4 percent vacant and the premiere buildings had asking rents of $2.43 a foot, according to preliminary data from Grubb & Ellis Co. Those are higher vacancy rates and lower asking rents than the rest of the Tri-Cities and countywide.
Still, Bohlinger said that as office markets in Pasadena and Burbank continue to tighten, Glendale stands to benefit. “The number of tenants getting ready to cut deals in that market is very large,” he said. “We’re predicting single-digit vacancy rates in that market within the next several months.”
Already, Glendale has lost some large tenants, including the new owner of the Disney Stores, Children’s Place Retail Stores Inc., which moved the operation to Pasadena. Leasing brokers in Glendale said there are rumors that the market could also lose a significant Warner Bros. unit, among other large tenants. To reverse the leasing slide in Glendale, leasing brokers say the city needs to land a large tenant.
*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
[email protected]
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