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Office Out, Hotel in as Sunset Millennium Plans Alter

Office Out, Hotel in as Sunset Millennium Plans Alter

By RiSHAWN BIDDLE

Staff Reporter

After two years of controversy over the Sunset Millennium redevelopment, developer Apollo Real Estate Advisors plans to fully reconfigure the project and add two hotels, condominiums and more parking spaces to the mix.

Sources close to the project say Apollo will scrap plans to build 219,000 square feet of office space on the eastern portion of the West Hollywood site, which is located at the intersection of Sunset and La Cienega boulevards.

Instead, Apollo plans to tear down the former Petersen Automotive building and build two hotels, which will be bought by the co-owner of the Fairmont Hotel chain upon completion.

Hotelier Lewis Wolff confirmed last week that his firm, Maritz, Wolff & Co. best-known for its collection of business and spa hotel properties including Santa Monica’s Fairmont Miramar would pay $60 million for the hotels, which would have a total of 300 rooms. Wolff expects the project, which will require rezoning two of the three parcels, to begin next year.

It’s the most recent twist in the saga of the West Hollywood development whose earlier plans were thwarted by a sour economy and community opposition.

Apollo’s previous partner, Bloomington, Ind.-based Maefield Development, had planned to spend $110 million to build a 10-story, 380-room hotel on the site of the now-demolished Tiffany Theater. But in the aftermath of the Sept. 11 terrorist attacks, Maefield’s president, Mark Siffin, spiked the project.

Changing plans

After buying out Maefield’s stake for an undisclosed price in March 2002, Apollo reversed course and began discussions with hotel operators.

Apollo officials declined comment on its plans for Sunset Millennium. But according to a source, it will present a revised plan within 90 days.

The move comes at a time when occupancy rates in West Hollywood hover around 71 percent, slightly above last year’s levels, according to PKF Consulting. Average daily room rates are expected to drop 4 percent this year, to $149.

“It’s a very hot market for hotel companies because of the locations. But it’s a tough market too,” said Atlas Hospitality Group President Alan Reay.

Apollo decided to pursue a second hotel after concluding that West Hollywood’s office market was too anemic to support more space, according to a source. The vacancy rate in the submarket was 13 percent during the first quarter, according to real estate brokerage Grubb & Ellis Co. Apollo’s own Sunset Millennium tower is just 80 percent filled.

Wolff said he would probably break with the area’s traditional emphasis on boutique hotels by turning to at least one of the major hotel brands. He said he has already spoken to hotel giant Marriott International about signing up with its lower-priced Courtyard brand.

But befitting the strip’s ad-heavy atmosphere, the sides of both hotels will be plastered with “tall wall” billboards, part of a deal Apollo negotiated with radio and outdoor advertising company Clear Channel Communications.

“It’s really going to be an interesting project,” said Wolff, whose son Keith will eventually handle the nitty-gritty details.

Homecoming

Wolff is best known for masterminding the expansion of Fairmont, the legendary hotel chain now 83 percent owned by Toronto-based Fairmont Hotels & Resorts.

The former real estate appraiser got into the hotel business in 1976 by building the first of four Holiday Inn and Hilton hotels. In 1996, he teamed with marketing heir Philip Maritz to buy up a string of hotels, including the Miramar and San Francisco’s Fairmont Hotel.

Meanwhile, a source said that Apollo plans a 200-unit condominium project in the centerpiece parcel where the previous hotel proposal was once slated.

Ironically, former developer Maefield proposed building a 446-unit apartment complex where the hotel was once planned. That idea angered West Hollywood officials, who said the hotel project would bring the city greater revenues.

Responding to concerns about traffic, Apollo also will propose adding another 1,200-space parking complex.

The moves are part of a major revamp being orchestrated by Apollo Principal Richard Ackerman, who took over the project after Maefield departed. According to a source, Ackerman has ordered a freshening up of Sunset Millennium’s 105,000 square-foot retail complex, including new signage and flowers.

“[Ackerman] has really made himself a presence on this project,” said West Hollywood economic development director Ray Reynolds.

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