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Sunday, Jun 26, 2022

Real Estate Column—Pacific Theatres Nears Deal For Stalled Screenland Site

The $41 million Screenland center being developed by OliverMcMillan in Culver City may be back on track as Pacific Theatres Co. is apparently close to signing up to anchor the stalled project with a single-floor cineplex featuring nine to 12 screens and up to 1,700 seats.

The $41 million mixed-use project, also known as the Town Plaza, is designed to include 60,000 square feet of office space, 30,000 square feet of restaurant space, 10,000 square feet for a Trader Joe’s market and the multiplex cinema. The city’s redevelopment agency plans to spend $15 million to build and operate an 800-space parking structure on the site.

Word that Pacific Theatres and OliverMcMillan are close to striking an operating agreement was welcome news at the Culver City Redevelopment Agency, which has been stung and stung again in efforts to resuscitate the city’s downtown.

“We’re pretty optimistic,” said Deputy Community Development Director Mark Wardlaw. “As we continued with the progress of the Town Plaza project, we were becoming more and more concerned about the state of the theater exhibition industry.”

In November, AMC Entertainment Inc., which was to anchor the project, backed out. Wardlaw said losing AMC was a serious blow.

“Our research at the time was telling us that AMC was in better shape than some of its competitors because it had unloaded old theater locations pretty early on,” Wardlaw said.

AMC pulled out anyway, after reporting serious losses and announcing it would close 300 screens nationwide over the next four years.

Neil Haltrecht, Pacific Theatres Realty executive vice president, said through a spokesman, that Pacific had not signed a deal with OliverMcMillan and would not discuss it further.

However, Paul Buss, executive vice president of OliverMcMillan, said the deal with Pacific Theatres is 90 percent complete. According to Buss, negotiations with Pacific Theatres, among other alternative anchors for the project, started even before AMC exercised a contingency in its agreement and pulled out.

Calvin Hollis, managing partner of Keyser Marston Associates, a real estate advisory company, said that landing Pacific Theatres would bring the project back from the dead. Culver City is a secondary market, Hollis said, because it is boxed in by existing theaters in Santa Monica and others under construction at Caruso Affiliated Holdings’ The Grove at Farmers Market development and J.H. Snyder Co.’s Howard Hughes Promenade project in Westchester.

“I think it is a coup to get someone like Pacific Theatres,” said Hollis, who has worked with the Culver City Redevelopment Agency. “It was certainly important to get a major theater operator that had confidence in the marketplace to bring its name to the project.”

Buss said the developer is not intimidated by the peripheral theater developments because they will draw from different pools of theatergoers.

“We know them all,” he said. “We think there’s enough market room for this location.”

While uplifting, the OliverMcMillan-Pacific relationship is not a done deal. Wardlaw said that the redevelopment agency and city still must amend official plans for the project.

If all goes smoothly, Wardlaw said, construction could begin in November and the project could be open for business 12 months later.

Downtown Draw

In a hopeful sign for downtown’s lagging office and retail market, the Downtown Center Business Improvement District said it has lured 24 businesses to consider downtown as the location to fulfill their combined requirement for more than 700,000 square feet of office and retail space.

Lawrence Williamson, economic development director at the BID, said he has recruited many of the businesses, but others have come “sniffing around” on their own. Space sought ranges from the 2,000-square-foot headquarters expansion for Full Moon Interactive to the 150,000-square-foot requirement of an unidentified tenant.

The BID declined to identify most of the prospective tenants for fear their current landlords would counter any deals offered downtown, though it has worked with Ralphs Grocery Co. and Full Moon, an e-business consultant that moved from Hollywood into 30,000 square feet on Wilshire Boulevard.

A deal here and a deal there, however, may not be enough to turn the tide in the downtown market.

With an office vacancy rate of more than 18 percent among the 30 million square feet of commercial space downtown, the BID would have to do some awesome recruiting to substantially firm the market.

“There are some perception issues we’re overcoming,” Williamson conceded. “It’s an affordable market, it’s available and it’s continuing to change. It’s a new downtown.”

BID President and CEO Carol Schatz said that potential downtown tenants include a law firm, nonprofit organizations, retailers, educational institutions and a light manufacturing company.

To Schatz, the interest in downtown is a natural reaction to developments such as Staples Center and its proposed peripheral retail and entertainment development and other anticipated developments such as Disney Hall.

Another Strouds Closes

The bankrupt Strouds Inc. announced it will shut the doors of its Santa Monica location, but the closing date has yet to be decided.

The closing comes as the company which sells bed, bath, tabletop and other home textile products seeks approval of the U.S. Bankruptcy Court to sell most of its assets to iHome Inc. iHome has agreed to buy 50 Strouds stores, two distribution centers, the company’s City of Industry headquarters and other assets for $38 million, according to Strouds.

Industrial Leasing

Trammell Crow Co. has filled three of its industrial buildings in the Irwindale Business Center, at Fourth and Tapia streets in the city of Irwindale. The first of these was a five-year deal valued at $2 million, signed by Mace Group Inc. for a 73,100-square-foot facility at 15861 Tapia St. Iron Mountain Records Management leased a 105,500-square-foot building at 5082 Fourth St. for 10 years with an aggregate value of $7.1 million. Superior Communications signed a five-year, $3.9 million lease for 140,400 square feet at 5042 Fourth Street.

Staff reporter Christopher Keough can be reached via e-mail at ckeough@labusinessjournal.com.

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