Miracle Mile is inching closer to gaining a new 13-story office tower – the first to be built in the area in more than a quarter-century.
After submitting preliminary plans to the city more than a year ago for a steel-frame building at Museum Square, developer J.H. Snyder Co. has begun to move through the approval process.
The city of L.A.’s Planning Department released a draft environmental impact report on the project for public review early last month, and comments are due later this month. Public hearings are expected to commence once a final EIR is prepared, perhaps as soon as this summer.
The proposed 250,000-square-foot project would be built on what is now a surface parking lot on the east side of Curson Avenue just north of Wilshire Boulevard and across the street from the George C. Page Museum at the La Brea Tar Pits.
The new building would be the second, long-awaited phase of a construction project developer Jerry Snyder began when he renovated the former headquarters building for Prudential Financial Inc. at 5757 Wilshire Blvd. in 1999.
The last office buildings constructed along Miracle Mile were completed in the mid- to late ’80s, including Snyder’s Wilshire Courtyard complex at 5700-5750 Wilshire, built in 1987.
But while the area might seem due for more modern office stock, it remains a question whether the market can support greater inventory. Several high-profile tenants have left – or will soon leave – gaping vacancies in the area. Entertainment publication Variety, for example, moved out of about 60,000 square feet it occupied at 5900 Wilshire earlier this year, and the Oprah Winfrey Network will move out of about 52,000 square feet at 5700 Wilshire in coming months. Brokers also believe it’s only a matter of time before E! Entertainment Television, which takes more than 340,000 square feet at 5750 Wilshire, will pull up stakes.
Still, Chris Runyen, a senior managing director for Charles Dunn Co., said that despite looming vacancies in the area, he believes demand for premier space in the Miracle Mile remains.
“If you look at the newest office buildings in Miracle Mile – like Wilshire Courtyard and 6500 Wilshire – that product is actually leasing for close to $4 a square foot (a month),” he said. “That justifies new construction.”
Monthly Class A office rents in the 5 million-square-foot submarket averaged $3.04 a foot in the fourth quarter last year, up from $2.69 in the year-earlier period, according to data from Jones Lang LaSalle Inc. The vacancy rate was 13.5 percent, at the lower end among Los Angeles County’s submarkets.
In anticipation of construction, Snyder hired brokers Josh Bernstein and Michael Geller of First Property Realty Corp. in Beverly Hills to lease the property. Bernstein, who said he has already begun courting interested parties in industries such as entertainment, education and health care, said Snyder won’t break ground until he’s signed an anchor tenant for the building. That approach runs contrary to plans he has in Hollywood, where he recently began construction on a $138 million office complex with nary a tenant confirmed.
“He’s not in any rush; he’s going to need a significant commitment before he’s willing to build this building,” Bernstein said. “Realistically, delivery would be late 2016 to early 2017 for actual occupancy. That’s assuming an 18- to 24-month build after getting approval.”
Snyder declined to comment.
Jim O’Sullivan, president of the Miracle Mile Residential Association, said he is currently reviewing the environmental impact report for the project and declined to discuss the project further.
Last summer, he told Park La Brea News Beverly Press that he was cautiously optimistic about the project. His optimism stemmed from his belief that Snyder, whose office is in the area, would carefully consider his neighbors’ concerns.
Those concerns, he said, have to do with how the “huge” project, in conjunction with other proposed projects in the area, might affect traffic and parking in the area. In addition to Snyder’s proposed office tower, three sizable residential projects and a new museum – the Academy Museum of Motion Pictures – are already under construction nearby. On top of all that, traffic-slowing work began earlier this year to extend the Metro Purple Line down Wilshire, work that’s expected to go on through 2023.
“We’re going to take a holistic approach and look at all these projects, because they’re all coming at once,” O’Sullivan told the paper.
Snyder bought the 7.5-acre Museum Square property in 1979. In addition to renovating the existing 11-story office building there, he constructed a five-story parking structure. His plans include adding two levels of parking to the structure – about 550 additional spots – to accommodate the second office tower.
Bernstein said that while he imagines the project won’t make it through the approval process without some opposition, he doubts it will amount to much.
“I’m confident in this project,” he said. “There are obviously going to be people who want to come out and make a stink just for fun, but I don’t foresee any major opponents. Jerry’s done a great job working with the community over the years.”
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