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Friday, Sep 22, 2023



Staff Reporter

The Pacific Design Center’s strikingly original building, known as “The Blue Whale,” is quietly being put up for sale.

Owners are asking about $60 million for the 750,000-square-foot building at Melrose Avenue and San Vicente Boulevard in West Hollywood, according to real estate sources.

Catellus Development Co., which leads the ownership partnership of the building, refused to confirm or deny that the building is for sale. Also refusing comment was Cushman Realty of Los Angeles, which sources say has been given the listing for the property.

Joel Polachek, chief executive of the design center, said flatly that the building is not for sale. “The existing ownership is in place and will remain so,” he said.

However, Polachek said officials are planning this week to announce changes at the 1.2 million-square-foot design center, which in addition to the 23-year-old Blue Whale includes a newer, 400,000-square-foot “green” building.

Polachek also said the center is commissioning the building’s original architect, Connecticut-based Cesar Peli, to conduct a study of the property. He would not say what that study would focus on.

An interior design trade magazine recently reported that New Jersey-based Vornado Realty Trust is interested in purchasing the building.

Vornado declined comment, but the real estate investment trust recently purchased the Kennedy family properties, a portfolio that included the Washington Design and Office Centers and Chicago’s Merchandise Mart.

The purchase made Vornado a dominant player in the furniture-and-design showroom business. Such businesses dominate Pacific Design Center.

The center fell on hard times when the recession pummeled its tenant base.

The ownership group fell behind on its $200 million mortgage, which is held by New York-based Teacher’s Insurance Annuity Association. That loan covers the entire property the 1.2 million square feet of existing buildings and the site of a proposed 400,000-square-foot cylindrical red building.

The owners began an aggressive push in mid-1996 to staunch the project’s losses. It replaced its design industry-oriented management with a team that had a real estate leasing background, and expanded its definition of “design” to include advertising agencies, Hollywood production companies and other creative tenants.

In the past year, the landlords signed about 124,000 square feet of new leases, renewals and expansions, according to Polachek. The entire center is about 75 percent leased, with the 750,000-square-foot blue building about 80 percent leased and the 450,000-square-foot emerald green building about 60 percent leased.

The green building got a boost last fall when the advertising firm Dailey & Associates moved into a new 55,000-square-foot headquarters, making it the only non-showroom tenant in the center.

The Blue Whale had been a White Elephant in the early 1990s for the city of West Hollywood, but its now a “huge asset” and tax-revenue generator, according to City Manager Charlie Mackinney.

“Things are booming there, and (the new management) has done a terrific job of turning that center around,” he said.

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