West L.A. real estate investment trust Hudson Pacific Properties Inc. is on a buying spree in downtown L.A.’s Arts District.
Only three months after it acquired the former Coca-Cola manufacturing plant at 963 E. Fourth St., the firm has purchased a portfolio of three properties one block away for an undisclosed price in a deal that closed Tuesday morning.
The properties, which total roughly 83,000 square feet, make up an entire square block bounded by East Fourth Street, Molino Street, Fourth Place and Mateo Street, minus one parcel.
Hudson approached the seller, Santa Monica firm ZDI Inc., with an unsolicited offer it couldn’t refuse, said ZDI president Steve Zimmerman.
All three buildings are vacant. Zimmerman’s firm extensively upgraded the 57,000-square-foot property at 405 S. Mateo St., which he said Hudson would likely develop as creative office. ZDI also renovated the building at 1019 E. Fourth Place, which will likely be leased to a restaurant tenant. The third property, at 1003 E. Fourth Place, was not renovated, and will likely be used as a parking lot.
Hudson Pacific did not respond to requests for comment on the sale but chief executive Victor Coleman commented on an upcoming 80,000-square-foot acquisition in the Arts District during an earnings call on Aug. 6, saying the space would be redeveloped as creative office, retail and parking.
The parcels are one block away from the former Coca-Cola plant, dubbed Fourth & Traction, which Hudson acquired in late May for $49 million from a partnership between Goldstein Plating Investments and Atlas Capital Group.
Hudson is clearly bullish on the Arts District, a fact which Coleman stressed in the earnings call.
“I mean, look, the Arts District is approaching almost Beverly Hills type rental rates,” he said, according to a transcript from Seeking Alpha. “We’ve got over a million feet of interest for both retail and office in that area...so the square footage demand and the returns are going to be completely different than what we consider as a downtown Los Angeles marketplace.”
Mike Smith and Ron Young of Lee & Associates represented ZDI in the sale.
“Hudson does beautiful projects, and they are very capable of bringing high-end social media type companies because they have those contacts,” Zimmerman said. “When they came to me with an offer, I thought, I know how to renovate buildings but I don’t have those relationships.”
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