A Turkish investor has purchased a prime Beverly Hills retail property in an off-market deal for $17 million and plans to build a five-star hotel in its place.

But before Serdar Bilgili of Istanbul-based BLG Capital can realize his goal, he must contend with the fact that a neighboring parcel that is a key to his development plan still lies beyond his reach.

Bilgili lost a bid for the site, at 499 N. Canon Drive, in June 2015 when he was first trying to get a toehold in the market. The property instead went to Vertigo clothing brand founder Shahriyar Akhlaghfar, who also goes by Shawn Far, for $33.3 million.

But Bilgili didn’t give up on the block. He targeted the neighboring retail property at 469 N. Canon Drive, buying it from local real estate investor John Bendheim in November for $17 million.

Now Bilgili is putting money back on the table to buy Akhlaghfar’s four-story, 60-year-old office building next door.

“We think that we have made a strong above-market offer for the property, and the owner will decide if he wants to take it,” said Ron Goldie, an attorney who has represented Bilgili but identified his client only as Grand Canon Development, a limited liability company based in Brentwood. Public records and a source familiar with the deal confirmed that Bilgili is the principal investor.

Akhlaghfar last week acknowledged that he had been approached about selling the office building, but said he is contemplating other plans for the site.

Among the options are developing the parcel’s 34-space parking garage that fronts North Santa Monica Boulevard, potentially as retail space, an art gallery, or a car showroom. He also said he might renovate the existing offices inside and out.

“We’re going to bring different plans for the site and see what the city approves that works for the community,” Akhlaghfar said.

He paid $1,441 a square foot for the building in 2015, and presuming he would sell above that level to BLG, the transaction would be among the priciest office sales on a square-foot basis in Los Angeles County.

Bilgili’s planned hotel project in many ways hinges on his ability to make a deal with Akhlaghfar, because the parking garage extends to North Santa Monica.

Goldie said his client has designs on a third property in that block as well: 9435 Santa Monica Blvd.

That building has 11,376 square feet of retail space leased to tenants including Fatburger and tanning salon Portofino. Local investor Bruce Gabbai purchased the site, known as the Marian Building, in 2013 for $11.7 million, or $1,033 a square foot.

Golden opportunity

The battle for ownership in the Golden Triangle – framed by Wilshire Boulevard, South Santa Monica Boulevard, and North Canon – is fueled by the area’s global prestige.

“There is an aura and a mystique about the Golden Triangle in Beverly Hills that probably doesn’t exist anywhere else in the country,” said Goldie.

The $17 million price tag for the 469 N. Canon retail property translated to a sky-high $1,742 a square foot, though nearby properties have sold for more. A 17,908-square-foot retail strip across the street sold in April for $38 million, or $2,122 a square foot.

The hotel concept is far from concrete, although Bilgili appears to have considerable hospitality development experience from spearheading projects in Turkey, including a W Hotel and Soho House in Istanbul. Goldie said the idea for Beverly Hills would be to commission an internationally renowned architect and offer deluxe amenities and services. Part of the appeal would be putting beds a few blocks from Hermes, Louis Vuitton, Chanel, and other posh Rodeo Drive shops.

“Every retail business owner in Beverly Hills would support this project,” Goldie said.

Beverly Hills Mayor John Mirisch said he would welcome proposals that abide by planning rules, which restrict buildings in commercial areas to about three stories.

“If someone wants to build something that’s code compliant, we’d be supportive of it,” he said. “We serve a community that’s well beyond the borders of the city. … I understand why for high-end, luxury hotels, Beverly Hills makes a lot of sense.”

Demand drivers

The city is already home to several high-end hotels, including the Four Seasons Los Angeles at Beverly Hills and the Peninsula Beverly Hills. Dalian Wanda Group recently won city approval to build its $1.2 billion One Beverly Hills, which will include 134 hotel rooms, and the 170-room Waldorf Astoria next to the Beverly Hilton is nearly complete.

Although cities usually offer incentives to lure hotel developers, Beverly Hills required Wanda to pay an extraordinary tax and fee package that it estimates will put $820 million in city coffers over the next three decades.

“It’s probably one of the hottest markets in the country right now in terms of guest demand,” said Alan Reay, president of Atlas Hospitality Group, an Irvine hotel brokerage and consultant.

The 22,090-square-foot office building at 499 N. Canon is 80 percent occupied, with tenants including the Beverly Hills Courier and medical equipment company Kenquest Inc., which was the previous owner.

Houman Mahboubi, a senior vice president at Jones Lang LaSalle who is the property’s leasing agent, said he is in talks with companies who want to inhabit the full building.

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