Three years after Los Angeles created a Mid-City redevelopment project area to combat blight in the inner city, the first major project there is working its way through the pipeline.
Developer Ronald Simms has proposed a big-box development on an 11.5-acre site at the corner of La Brea Avenue and Adams Boulevard. The L.A. City Council last week voted to give Simms the exclusive right to negotiate for 180 days to bring a development to that site.
“We’re very confident we’ll be able to hammer out a sensational deal for the city,” said Howard Sunkin, vice president of Cerrell Associates Inc. and a consultant on the development.
The project cost could run anywhere from $38 million to $62 million, and Sunkin said he expects “minimal” public subsidies.
Simms, who owns Century City-based Simms Commercial Development Corp., has been developing retail projects around the state for the past 20 years.
Sunkin said such national retailers as Wal-Mart, Costco and Toys ‘R’ Us have expressed an interest, although no agreements have been signed. He said the development will create close to 1,000 new jobs.
“I consider the area to be blighted and very much in need of redevelopment,” said Laura Rudison, political liaison for the Church of the Harvest, which is kitty-corner from the project site. “The church and Bishop Clarence McClendon are in full support of the project because it represents revitalization, rejuvenation and economic development.”
She said it also will provide convenience to residents, who often have to travel far and wide for their shopping.
The site currently consists of 63 separate parcels owned by several different owners. About 77 residential units and 20 businesses will need to be relocated to make way for the project.
The Hertz Group, a real estate acquisitions firm based downtown, has acquired the Wilshire Square Building, a class-A office building at 3345 Wilshire Blvd., for $7 million from the Philippine National Bank.
The 12-story building is in the Mid-Wilshire submarket, where the Hertz Group has been getting more active. Wilshire Square’s tenant roster includes the Philippine National Bank, Sanwa Bank of California, Federal Express and the YWCA of Greater Los Angeles.
While many of the Hertz Group’s properties are historical, Wilshire Square was built in the ’70s. The firm’s portfolio also includes the Oviatt Building, the Park Plaza Hotel, the Popular Center, the International Jewelry Center, California Jewelry Mart, University Club Building and the Wiltern Theatre building.
Out on his own
John Walsh, who says he was the top-producing broker at Marcus & Millichap, has left to form his own firm, Walsh & Co. Inc., which has offices in Library Tower downtown.
“This is the culmination of 11 years of trying to figure out a better vehicle for clients and agents,” Walsh said.
Agents at his firm will have market and product specialties, including apartments (his expertise while at Marcus & Millichap), industrial, retail and office. The firm’s focus will be on brokering sales of income-producing properties, not leasing.
“You have to be a specialist to add value today,” Walsh said.
Two agents will be assigned to each of several geographic areas, including the San Fernando Valley, Westside, Hollywood and Wilshire Center, Tri-Cities, South Bay and the San Gabriel Valley. So far, six agents have come on board. Since Jan. 1, the firm has closed about $20 million worth of real estate deals.
Downtown hit looms
BP Amoco PLC’s announced acquisition of Atlantic Richfield Co. potentially spells more bad news for the downtown office market, which already has a vacancy rate of about 19 percent.
Arco officials say they have no idea what the combined company’s space needs will be, but it’s almost certain it won’t have a major headquarters presence here because BP is based in London.
Arco has just completed a round of cost cutting and a move from Arco Plaza, consolidating in the Citibank building and in Arco Center. The result is that about 250,000 square feet of space is soon to hit the market. That space will be competing with several hundred thousand square feet of sublease space unleashed by Sempra Energy and Aames Financial Corp., as well as direct space vacated by other large tenants that moved to other downtown locations in the past year.
“It’s not painting a bright light for existing landlords,” said Brian Ulf, a longtime broker downtown for Cushman Realty Corp.
Whitley Collins, a downtown broker with CB Richard Ellis Inc., estimates there is easily 1 million square feet of space available in class-A buildings.
“People in the marketplace are looking to swap space. There is no big industry like insurance companies five years ago” that is looking to move in, he said.
Tempering some of the bad news for downtown are two recent, relatively small lease deals.
Investment banking and securities brokerage Salomon Smith Barney Inc. signed a long-term lease for 36,000 square feet in Library Tower. The firm is consolidating its banking and retail locations downtown into space on the 34th and 63rd floors.
Eric Duncanson, Stephen Walbridge and Stephen Barker with Julien J. Studley Inc. represented Salomon Smith Barney. Landlord Maguire Partners was represented in-house by Pat McRoskey.
In a separate deal, Alliance National, which provides executive offices for Fortune 500 companies, restructured and extended its lease for 32,000 square feet at 445 S. Figueroa St. Duncanson represented Alliance in the $4 million transaction. Landlord CommonWealth Partners was represented in-house by Peter Johnston and Darren Dahlman.
MBK Southern California Ltd. has entered into a development services agreement with L.A. County to design and develop a new courthouse in Lancaster. The 370,000-square-foot structure will house 15 courtrooms for Superior and Municipal courts, as well as offices for the district attorney, public defender, probation department and sheriff. The goal is to break ground in the first quarter of next year, said Andrew Trachman, president of MBK Southern California.
Elizabeth Hayes can be reached at (323) 549-5225 ext. 229.