The last large development site expected to be available in Hollywood for the foreseeable future has been put on the market amid the region’s continuing resurgence.
The nearly 7-acre parcel is at the southeast corner of Sunset Boulevard and Western Avenue near Childrens Hospital Los Angeles and currently is the location of a Food 4 Less supermarket and McDonald’s restaurant.
With the revitalization of Hollywood now spreading east of the Hollywood (101) Freeway, the site presents a key development opportunity because it is increasingly difficult to assemble parcels larger than one or two acres in the area, according to real estate brokers.
“In terms of sheer size there is nothing left like this,” said John Tronson, a principal in the Hollywood office of Ramsey-Shilling Commercial Real Estate Services who has long worked the market. “It’s enormous.”
Though options for the property include medical office space and possibly even a new hospital, the site will most likely be used for a mixed-use development with retail and residential components that would complement the burgeoning high-density neighborhood. The property is within a special Hollywood planning zone that encourages the development of mixed use, transit-oriented developments.
“Regardless of what project is there, we’d like to see a mixed income community with market rate, workforce and affordable housing,” said Helmi Hisserich, regional administrator for Hollywood for the Community Redevelopment Agency of Los Angeles.
The property is owned by Sterik Hollywood LP. The McDonald’s and Food 4 Less both have “intermediate term leases,” according to Timothy L. Bower, a member of the CB Richard Ellis Group Inc. team representing Sterik.
The specific terms of those leases factor heavily into the potential value of the property and redevelopment options. Longer term leases could devalue the property because they would require a developer to wait until they expire, or spend large sums to buy out the remaining years on the lease.
Bower and the other CB Richard Ellis brokers representing Sterik would not elaborate on the leases or discuss the current ownership because of a confidentiality agreement.
Still, Hollywood real estate experts say the 294,701-square-foot parcel at 5420-5450 Sunset Blvd. is likely to attract the interest of national development companies and likely will sell in the $35 million to $40 million range.
The property is situated on a key transit corridor a few blocks from the Hollywood Freeway and is within walking distance of the Metro Red Line subway station at Hollywood Boulevard and Western Avenue, making a high-density project likely. Tronson said the site could possibly support 1,000 residential units.
Chris Bonbright, chief executive of Ramsey-Shilling, said that while retail could be successful because of high densities in the area, luxury housing “is not going to make any sense.”
“I would say that probably the most logical use is some kind of affordable housing whether it’s for sale or for rent,” Bonbright said.
Two years ago, the nonprofit developer Hollywood Community Housing Corp. opened Views at 270, a mixed-use complex that includes 56 low-income apartments above a Walgreen’s drug store across the street.
“That project was very precedent-setting for this intersection,” Hisserich said. “This is a part of Hollywood where we are going to transition away from the old L.A. with setback retail and an ocean of parking and a really harsh pedestrian environment.”
Though a residential project would seem likely, brokers said a medical office project would also make sense for the area given the proximity of Childrens Hospital and Kaiser Permanente Hospital.
