61.8 F
Los Angeles
Thursday, Dec 7, 2023

Insurer to Dress Up Strip Club Site as New Office

Insurance company Progressive Corp. is building its first Los Angeles County offices in Pasadena.

The Mayfield Village, Ohio, company purchased the defunct 12,000-square-foot Pleasures Gentlemen’s Club and parking lot at 3570 and 3672 E. Foothill Blvd. for $6 million last month from Stephen Schultz, a local businessman who bought it in 2010 with the intention of turning the space into medical offices.

Progressive plans to demolish the building to develop a 20,000-square-foot claims center and office building.

The company is expanding its claims facilities, which total 56 nationwide, across the United States. It formerly evaluated claims by sending agents to customer homes but has moved to opening centralized facilities as its customer base grows. “It allows the customer to drop off their car and we do everything for them,” said company spokesman Jeff Sibel.

The company needs its development plans approved by the city. However, it anticipates receiving the green light this year. Sibel said that he expects about nine months of construction before the facility is opened.

This will be the company’s second claims center in California. Its first one opened in San Diego several years ago. Sibel said Progressive is looking to open more L.A. locations.

Mark Esses, managing principal at California Realty Group, represented Progressive. Coldwell Banker Commercial’s Bill Ukropina, John Archibald and Guillermo Olaiz represented the seller.

Tight Space

The apartment market has been one bright spot in an otherwise sluggish housing market. That’s especially so in tight Santa Monica – where renters are willing to pay as much as $1,708 a month for 350-square-foot studios.

West L.A. developer NMS Properties is only halfway through building a two-tower project at 829 Broadway and already 50 of 97 studio and one-bedroom units in the first tower are leased.

“There is no question that there is a demand for modestly sized apartments,” said Jim Andersen, company president.

The Luxe@Broadway project features units ranging from 350 to 440 square feet with monthly rates between $1,495 and $1,708. Duncan Lemmon of Lee & Associates/West L.A. said the rents, at roughly $4 a square foot, are higher than the about $2.50 area average.

“People are renting them; they are doing very well,” Lemmon said.The five-story complex has income restrictions that prohibit renting to individuals who earn more than about $59,000 annually or couples who earn more than about $68,000.

Designed by Santa Monica’s Killefer Flammang Architects, the property includes two levels of underground parking and 7,000 square feet of retail space. The second building is expected to be completed by the fall.

About three years ago, NMS opened a similar microapartment project at 2029 Olympic Blvd. that is nearly entirely leased.

Downtown Vacancies Growing

MPG Office Trust Inc. is continuing to struggle with rising vacancy rates in its core downtown L.A. portfolio, but it hasn’t had to lower it asking rates as might be expected.

The company’s occupancy rate for its downtown portfolio of seven buildings, including the marquee U.S. Bank Tower, fell nearly four points to 78.8 percent in the fourth quarter from a year earlier, according to an earnings report released last week. However, the company said it has been able to maintain its leasing rates at about $1.83 a square foot, which has propped up the entire market’s rental rates.

That’s unusual according to a new report by Chicago’s Jones Lang LaSalle Inc., which found Class A vacancy rates declined and rental rates rose during the quarter in major U.S. cities.

Jones Managing Director Tony Morales, a former partner at MPG’s predecessor company Maguire Partners, said the unusual dynamic is mostly the result of MPG owning about 75 percent of downtown’s vacant space. “There’s no other market in the U.S. that has that kind of control by one ownership,” he said.

The trend is expected to continue. Nearly 134,000 square feet worth of leases will expire this year at MPG’s 1.3 million-square-foot Two Cal Plaza. But in a conference call with analysts last week, Chief Financial Officer Shant Koumriqian said the company has been negotiating favorable renewals. “There are certain landlords in downturn L.A. that are fairly aggressive in concessions, but so far we have been holding our ground,” he said.

Staff reporter Jacquelyn Ryan can be reached at jryan@labusinessjournal.com or (323) 549-5225, ext. 228.

Featured Articles

Related Articles