Mixing It Up: Gabe Kadosh at AvalonBay’s West Hollywood mixed-use development, where he will handle retail leasing.

Mixing It Up: Gabe Kadosh at AvalonBay’s West Hollywood mixed-use development, where he will handle retail leasing. Photo by Ringo Chiu.

If you want to take a sharp turn toward the seedy, you don’t even have to turn off Santa Monica Boulevard. If you’re coming from West Hollywood, all you have to do is drive east.

But one developer is betting big bucks on a notoriously sketchy stretch in Hollywood with a mixed-use project large enough, it hopes, to be its own safe haven and even a catalyst for gentrification in the area.

AvalonBay Communities Inc. of Arlington, Va., recently spent nearly $100 million to snatch up almost six acres at 6677 W. Santa Monica. It plans to build a $375 million megadevelopment with almost 700 apartments and a 25,000-square-foot retail component.

The project, at Santa Monica and Las Palmas Boulevard, is fully entitled and is being designed while its permits are pending. It sits only blocks away from the West Hollywood city line on La Brea Avenue, and less than a mile from the real estate investment trust’s other development on the boulevard, under construction at 7300 Santa Monica in West Hollywood.

While the properties are close together and on the same boulevard, they might as well be worlds apart.

“Going a mile east is dramatically different,” said Gabe Kadosh, a vice president at Colliers International who is leasing the retail portion of both projects for AvalonBay.

In West Hollywood, the mixed-use building of 371 residential units and 32,300 square feet of retail, already half-leased, is coming out of the ground. The development will be anchored by Trader Joe’s, which was a tenant in the strip mall the project is replacing.

AvalonBay’s Hollywood development, dubbed Ava Hollywood, is expected to break ground in the second quarter of next year and be completed in early 2018.

“On the Hollywood stretch (of Santa Monica), there is check cashing, a doughnut shop, light industrial and chain retail,” Kadosh said. “West Hollywood is retail dense and (higher end). If you were to look at them on a map, you’d say, these projects are so close they should feed off each other, but they are in completely different markets.”

Change underway

Ava Hollywood would rise a couple of blocks from Donut Time, a shop at the center of what a 2008 Los Angeles Times article called a “gritty swath of Santa Monica Boulevard that is a late-night magnet for transgender and male prostitution.”

By investing hundreds of millions of dollars in the neighborhood, AvalonBay is betting that change is already underway and will be further along by the time its development is completed in three years.

“The size of the project is such that it has the potential to change the neighborhood and create a critical mass,” said Mark Janda, AvalonBay’s senior vice president of development.

Neighborhood advocates agree the area is on the rise.

“The area along Santa Monica Boulevard is cleaning up just like the rest of Hollywood,” said Leron Gubler, chief executive of the Hollywood Chamber of Commerce, who added there is no doubt the apartments will lease up.

Multifamily projects in Hollywood have an average of less than 3 percent vacancy, according to CoStar Group Inc.

Kadosh said that Kilroy Realty Corp.’s multiple mixed-use creative office developments and other projects in Hollywood could feed that demand.

“What attracted us (to the site) was its adjacency to Hollywood Center Studios across the street and all of the entertainment industry jobs located south of Santa Monica Boulevard,” said Janda, pointing to Paramount Studios and Raleigh Studios nearby.

AvalonBay’s hopes for the two developments are reflected in their branding. “Ava” is AvalonBay’s brand for the hip creative class, Janda said, with bright colors and social gathering spaces. Avalon West Hollywood received AvalonBay’s flagship branding, which is its most high-end and aspirational brand, Janda said.

Pricing is not set at either project, he said, but both will contain affordable units. At Ava Hollywood, 31 of the 695 units will be affordable. At Avalon West Hollywood, 77 of the 371 apartments will be affordable units developed by West Hollywood Community Housing Corp. for senior citizens.

Demolition derby

Gene La Pietra, owner of two nightclubs on the future Ava site – Circus Disco, which says on its website that it was established in 1975 in response to discrimination gay men of color experienced at venues in West Hollywood, and Arena – planned to redevelop the site as a large residential complex.

That project ran into financial difficulties, sources said, and La Pietra, who could not be reached for comment, sold the entitled property to AvalonBay. As a result, AvalonBay did not have to go through the entitlement hurdles in Los Angeles.

Kadosh said he has developed a retail leasing strategy that reflects the differences between the two locations. Ava Hollywood is surrounded by chain stores, while Avalon West Hollywood is among more high-end retailers.

As a result, Ava Hollywood’s retail will be amenity focused, giving residents what they need in an area that is not flush with walkable options.

“With almost 700 units, people are going to need everyday things that are downstairs,” he said. “In a lot of cases, REITs will select tenants based on who pays the most. In our case, it’s about trying to create a little community out of the retail.”

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