Kilroy Realty Corp. has plunged into the fray on the Sunset Strip with a multimillion-dollar acquisition: a 179,000-square-foot mixed-used development it bought for $210 million. The property, known as the Sunset, sits on the Strip between Sunset Plaza Drive and Alta Loma Road and consists of a 10-story office tower, three retail buildings, a 930-space parking garage as well as three billboards.
The seller was Palo Alto’s Broadreach Capital Partners, which purchased the 2.2-acre site for $105 million in 2006, said Andrew Harper, a managing director at Holliday Fenoglio Fowler who represented Broadreach.
Broadreach decided to cash in after making improvements to the property and bringing in new retailers, Harper added. The site is home to SoulCycle, H&M, Oliver Peoples, and one of the highest-performing Equinox gyms in the region. The new developments under construction on surrounding blocks – slated to add more than 758 hotel rooms and 254 residences on Sunset Boulevard – will likely drive foot-traffic to the stores, boosting the value of their locations.
“That will be a significant uplift to the retail portion of the project,” Harper said.
In another sign of the Sunset Strip’s growing shopping power, high-end retailer Fred Segal recently signed a deal for 22,000 square feet at CIM Group’s forthcoming Sunset La Cienega hotel and residential project.
The area’s office market is also performing well. Monthly rents on the Strip jumped 25 percent in the past couple of years to hit between $6 and $7 a square foot – one of the highs in all of Los Angeles.
Harper was assisted on the transaction by HFF’s Ryan Gallagher, Michael Leggett, Bryan Ley, and Tim Geiman.
Driving Leases
Trion Properties renovated the Eleanor, a 90-year-old apartment building in MacArthur Park, with modern amenities and an art deco motif in May. The only thing that couldn’t be improved was the parking – because there is none.
Trion Managing Partner Max Sharkansky knew, from the start, that this failing could make it a bit harder to attract tenants.
“L.A. is a driving town, no matter what happens,” he said. “We had to work around our issue.”
So he turned to Uber, offering tenants rideshare credits worth $100 a month when they signed a one-year lease. Within a few months, the building hit occupancy rates between 93 and 95 percent, according to Sharkansky. Now that the place has filled up, he has toned down the offer, giving away $250 of Uber credits to new tenants in a one-time deal.
He thinks the trend will catch on as other landlords in parking-challenged neighborhoods seek to attract tenants.
“This will probably become more of a popular marketing tactic, especially as people stop driving and use Uber more as a form of public transportation,” he said.
He’s prepared to swallow a bit of an extra expense, categorizing it as a marketing cost, the same way he allocates resources for listings on Apartments.com.
Creative Spin
Another lackluster office is about to get a trendy update. A 14,200-square-foot office on Jefferson Boulevard in Culver City recently sold to Luzzatto Co. Inc. in Santa Monica, which plans to renovate the lobby, patio, façade, windows, and interior workspaces. Luzzatto paid $6 million for the former industrial building constructed in 1982. The site last sold for $1.9 million in 2003 to James and Kathleen Rodgers.
Luzzatto Managing Director Ron Harari said his firm found the property off-market, a result of paying close attention to Westside office markets and looking for buildings that would lend themselves to creative conversions.
“There’s not much supply left,” he said. “The ability to get it when it’s raw and put your stamp on it is always appealing.”
Tibor Lody of Lee & Associates West Los Angeles represented the seller; Aleks Trifunovic and Keith Fielding of the same brokerage represented Luzzatto.
Staff reporter Daina Beth Solomon can be reached at (323) 556-8337 or [email protected].
