Fortune Business Park (Credit: Commercial Cafe)

Lincoln Property Company sold an industrial warehouse at 13668 Valley Boulevard in the City of Industry for $27.2 million to Deutsche Asset Management, the U.S. subsidiary of German Deutsche Bank Group, last month, The Real Deal has learned.

LPC has owned the 157,900-square-foot site, known as the Fortune Business Park, since September 2006, when it acquired it for $22.3 million, records show.

Tenants at the Class A business park include NRG Innovations, a manufacturer of racing auto-parts, and the headquarters of Boiling Point, a hot pot restaurant chain.
JLL had the listing.

The massive Deutsche Asset Management owns a total of 1,237 properties in the United States, worth over $26 billion, according to Real Capital Analytics. Approximately 44 of those properties are in Los Angeles.

The seller, Dallas-based LPC, has been steadily increasing its presence in the California region. It owns massive commercial projects in Los Angeles, including the 566,000-square-foot Wateridge complex and the reconstructed Pen Factory in West L.A. It developed and sold the Runway at Playa Vista.

A rendering of the Nordstrom flagship store at Central Park Tower

From TRD New York: The financially troubled department store Nordstorm has run into a roadblock on its quest to go private.

After scurrying to raise financing for what could be a $10 billion leveraged buyout, Nordstrom announced that it has suspended plans to take itself private, according to the New York Post.

The Nordstrom family originally planned to put up its 31 percent stake in the company, which as of Aug. 1 was valued at $2.5 billion, and private-equity firm Leonard Green & Partners was to contribute another $1 billion in equity.  But now it won’t try again until after the holiday season.

“The Special Committee … is prepared to thoroughly evaluate such a proposal from the Group at that time, if one is made,” the company said in a statement. “In the meantime, the company and its employees will remain focused on running the business and delivering the best shopping experience for customers”

The chain’s shares fell more than 6 percent in early trades after the announcement.

Nordstrom has already invested at least $249 million in a planned store at Gary Barnett’s Central Park Tower. It is not likely that the new store would be affected if the company goes private. [NYP] – Christopher Cameron 

From left: Larry Ellison, Rick Caruso and Edward Roski Jr. (Credit: Getty Images)

Earlier this year, Southern California played host to the most expensive mansion listing in the country. Now, the region is claiming the throne once again with the world’s richest real estate player.

Donald Bren, chairman of the Irvine Company, came in at No. 28 on the latest Forbes 400 billionaires list and No. 1 on the real estate industry list. The developer was worth an estimated $16.3 billion as of Tuesday (double the net worth of New York billionaire Stephen Ross, the second-richest real estate titan on the list). Bren’s Newport Beach-based company owns over 115 million square feet of real estate, including 500 office buildings, over 40 shopping centers and nearly 60,000 apartments, Forbes reported. Built out over decades, the Irvine Co. owns more than 7 million square feet of office space at the Irvine Spectrum Center alone. The company has been bidding on Amazon’s second headquarters heading to Irvine. Angeleno developer Nelson Rising of Rising Realty Partners serves on the Irvine Co.’s Board of Directors and Executive Committee.

Coming in at 97th in the world and fifth in the real estate industry is Edward Roski Jr., who has an estimated net worth of $5.5 billion. Roski, president and chairman of Majestic Realty Co., owns more than 83 million square feet of commercial real estate. Although based in Los Angeles, Majestic Realty has significant projects in the works across the nation, including a 320-acre business park in Dallas and a 441-acre project in Pennsylvania’s former Bethlehem Steel plant. Roski’s company was instrumental in developing the Staples Center in Downtown Los Angeles – home to the L.A. Kings and the L.A. Lakers, two teams of which he is a partial owner.

Brentwood-based Rick Caruso came in at No. 179 with a $3.9 billion net worth. The mega-developer is best known for building retail havens the Grove, which gets an average of 49,000 daily visitors, and the Americana at Brand. As of April, his portfolio consisted of 13 developments with three – Palisades Village, Miramar Beach Resort and 333 La Cienega — currently under construction. In recent years, Caruso’s eponymous company expanded from the luxury retail sector into luxury apartments, resorts and office properties. It acquired the Masonic Temple in Glendale and converted it into a creative office building that now houses CBRE.

Following at No. 212 is Beverly Hills-based Donald Sterling, who has an estimated net worth of $3.5 billion. The landlord built his fortune through buying gritty apartment buildings and some single-family homes in Los Angeles — mostly in poorer areas. A former owner of the L.A. Clippers, the outspoken billionaire’s properties include the Beverly Hills Plaza Hotel and several apartment buildings on L.A.’s Westside and in Koreatown.

Newport Beach developer George Argyros ranked No. 340 with a net worth of $2.4 billion. He leads Arnel & Affiliate, which owns 5,500 apartments in Orange County and nearly 2 million square feet of commercial real estate in the region. Earlier this year, Argyros and his wife pledged $2.5 million to build a leadership center for the Girl Scouts of Orange County. He serves on the Board of Trustees of Chapman University.

While not categorized by Forbes as a real estate investor, Malibu local and Oracle co-founder Larry Ellison ranked No. 5 on the billionaire’s list. The software mogul, worth a whopping $59 billion, has established himself a real estate mogul in his own right throughout the years, acquiring a sizeable portfolio of properties in Malibu’s Carbon Beach. Aside from 12 houses in the area, Ellison, now chairman of Oracle’s board and its chief technology officer, also owns the Malibu Racquet Club, Nobu Ryokan Malibu Hotel, Nobu and Soho House. [Forbes] – Natalie Hoberman

Katy Perry and the property at 1554 Hill Drive (Credit: Redfin, MLS)

Even with her song “By The Grace of God,” Katy Perry couldn’t find the holy grail needed to win this battle.

Eagle Rock’s Bekins Estate is back on the market at $5.59 million after Katy Perry’s plan to purchase the home for Catholic Priests fell through, Curbed reported. Currently, it is the most expensive home in the neighborhood.

The unusual saga began last year when plans were filed with the city to convert the Bekins Estate at 1554 Hill Drive into a religious retreat for Catholic Priests. The pop star was so keen on that idea she tried to buy the property for the church. Ultimately, however, the owner of the home – a Kvassay family trust — decided against it out of fear that the historical home would become “a haven for troubled priests.”

Spanning nearly 8,900 square feet, the 1925-built home was commissioned by moving industry leader Martin Bekins of Bekins Co. It’s massive three-acre lot includes nine bedrooms, multiple fireplaces, a swimming pool and spa, gardens, and a greenhouse.

Laura Brandt of Partners Trust has the listing.

The “I Kissed A Girl” singer’s involvement with the church doesn’t end in Eagle Rock.

She recently won a battle in the Los Angeles Supreme Court to buy a Bernard Maybeck-designed Los Feliz convent from a group of elderly nuns. Perry, with the support of the Archdiocese of L.A., paid $14.5 million for the Waverly Place convent.

The pop singer, famous for hits including “Teenage Dream” and 13 Grammy nominations, has an impressive real estate collection. She’s been shopping her adjacent Hollywood Hills West compounds since the summer, and splurged $19 million on a Beverly Crest home earlier this year. [Curbed] – Natalie Hoberman

Jade Mills (Photo by Adam Southard)

From the latest issue:

You can’t work in residential real estate in L.A. for too long without hearing her name. Jade Mills of Coldwell Banker International is the top female luxury broker in Los Angeles, according to The Real Deal’s April ranking. But the agent, who scored nearly $360 million in sales for properties of $7 million or more in 12 months, began life in less glitzy climes, growing up as the daughter of a dairy farmer east of San Francisco. After a brief stint as an actress and model in L.A., Mills got her real estate license. Her career representing high-net-worth individuals and celebrities began in earnest when she met Lionel Richie on the valet line at a charity event on Rodeo Drive. From there, she went from knowing no one in Los Angeles to becoming one of Hollywood’s household names. Last year, she was involved in the record-breaking $100 million sale of the Playboy Mansion to Hostess heir Daren Metropoulos and went on to represent his brother, Evan, in his $65 million purchase of billionaire Gilbert Chagoury’s Trousdale Estates palace. The Real Deal sat down with Mills to get the skinny on her stunning client roster.

What was your childhood like? My dad was a dairy farmer. I grew up in a small town, and we went back and forth between Alamo and Turlock, where the ranch was. I thought I had everything that I could ever want or need growing up. I had amazing friendships with my neighbors. The families all got together and we had potluck dinners.

What were you like as a kid? I wasn’t a girly girl at all. I had girlfriends who I am still in touch with, but I really enjoyed playing baseball and football with the boys. I would ride my bike faster than them. I’ve always been very competitive in whatever I did. I sold a paper called the Valley Pioneer in a paper drive for a charity, and I sold more than anybody for that charity.  

What were your parents like? My brother and I grew up with the most fabulous, loving, kind parents who always told us we could do anything we wanted if we set our minds to it. And now I have four children and seven grandchildren. My children are all, in my eyes, perfect….We are a very close family, and we just got back from Maui, where there are now 16 of us who go every year for my birthday.

What brought you to Los Angeles? I met my first husband at Berkeley, and he was a singer. We quit school and loaded up the car and came to L.A. We lived in a motel for a month, and then found an apartment right off Hollywood Boulevard, on Orange Drive…The first year we were married, he worked all around L.A. in different nightclubs. If they ever needed a female onstage, I was the tambourine player.

How did you break into the real estate business? My first husband and I were married for three years. Then, when my daughter was born, he decided he really didn’t want to be married. I was trying to support my daughter by doing some commercials, and some modeling, and it was really hard to make a living. When I got my divorce, we had a house [to sell, in Sherman Oaks], so I called a real estate broker, whose name was Spike Dresser. He had been a policeman, and we became very good friends. He said to me, ‘Why don’t you get your real estate license? It’s really something you could do sort of part time.’ Which is not true, but the idea was that I would be able to watch [my daughter] Tiffany, and sell real estate on the side.

I understand that you now work with your husband in some capacity. What does he do? My husband is actually my third husband. My second husband passed away at 39 years old. I am now married to the most wonderful man on Earth, and he has his own business. He buys and fixes and sells homes, but he also works with me in advertising. Stephanie [Zebik] does all the advertising in the office, but Adam is always calling Stephanie and driving her crazy with ideas. It was his idea that [our ad should run] in the playbills, and as it turns out, the playbill has been amazing for my business. It’s great name recognition.

How did you start building your client Rolodex? I think that the best way to get clients is through your contacts and through your friends. I worked with the Beverly Hills Education Foundation, raising money for the schools, and I worked with a couple of children’s charities. Through the children’s friends’ parents, and through charities, I became acquainted with real estate, and these people started trusting me, and that was the beginning.

Do you still get starstruck? Coming from the farm, I’m still very star struck. Some celebrities, I’ve sold [to or for] and then I really don’t see that much after. And some I consider good friends. But I’m still very starstruck.

You’re in high demand — how do you make sure you have time for all your clients? I have definitely weeded out clients. I work with the clients that I really love and enjoy working with, and I’ve given up a few clients that I find don’t mesh with my way of thinking.

What are your vices? Probably too much work. My children always say, ‘Mom, we want you to spend more time with us.’ I think I’m better now at balance than I have been in the past. I do love to go away occasionally, but when we go away, I end up doing business wherever we are. So we were just in Maui, and I had to see houses and condos and visit the Coldwell Banker offices.

What is your favorite thing you’ve ever purchased? Well, I will say that I am a shopper. I love fashion and design. I have also earned my own money. So I love to buy things on sale because I have worked very, very hard for it and won’t just buy anything at any cost. So I would have to say sale shopping is another vice.

What do you do in your spare time? I love being with my family. We have a house in Malibu, so I love for everyone to come there. Honestly, I would like to know a little bit better what free time is like.

Rendering of French Market Place with Jason Illoulian (Credit: R&A Architecture and Design)

An iconic spot once dubbed “the gayest place on earth” is here to stay.

Developer Faring will now incorporate — not demolish — the shuttered French Market Place at 7985 Santa Monica Boulevard into its new project, Curbed reported.

Faring is now planning a ground-floor restaurant with outdoor seating, a coffee shop and creative offices for the West Hollywood site, anchored by the original 1936 French Market grocery structure.

Initial plans called for a tear down of the historically gay locale to make room for a four-story structure with 50,000 square feet of office space, 8,600 square feet of eatery space, 4,400 square feet of retail, and 3,200 square feet for a bar or nightclub.

Faring said the restaurant’s facade will be remodeled to “commemorate the LGBT civil right struggle.” Renderings suggest bronze relief-sculptures will feature the faces of prominent activists.

The new “French Market” project still needs city approval before it can move forward. Faring says the project will not exceed the permitted density or square footage limits in the zoning code.

Faring, led by WeHo native Jason Illoulian, recently took a swim in Long Beach’s waters with a $47 million purchase of 100 Oceangate Street. [Curbed] – Natalie Hoberman

Rendering of The Villages at the Alhambra (Credit: The Ratkovich Company)

The Ratkovich Company filed plans to build a multifamily residential complex on its 45-acre mixed-use campus at 1000 S. Fremont Avenue in Alhambra, Urbanize reported.

The Wayne Ratkovich-led company, which is the minority owner of the site, proposed a three-phase development on 20 acres of land currently occupied by parking lots and small commercial buildings, according to documents filed with the Alhambra City Council last week. The project, dubbed “The Villages at the Alhambra,” would create up to 1,061 residential units (516 for sale, 545 for rent), split up with internal roads and pedestrian walkways.

Ratkovich initially planned a 351-unit condominium complex for the site in 2006 but it never came to fruition.

Phase one of its new proposal would consist of building the proposed parking structure, located along Palm Avenue. The second phase would consist of three wrap buildings along Mission Road, while the final phase would involve building three podium-type buildings and 36 townhomes on Orange Street.

Ratkovich Co. bought the Alhambra complex in 1999 and refinanced it with a Goldman Sachs loan in 2006. A partnership led by the Ratkovich Company and American International Group sold a majority stake in campus to two new partners, ELITE International Investment Fund and Shanghai-based Future Land Holdings, in February. Ratkovich retained a minority stake in the project and reamins the general partner, overseeing day to day operations, while AIG exited the deal.

The sale of the property helped the previous partnership pay off an existing $130 million CMBS loan attached to the property, which had been transferred to special servicing amid concerns of a default.

Ratkovich has struggled to lease up its Bloc development in Downtown Los Angeles. [Urbanize] – Natalie Hoberman

Margo Leavin in Hollywood Hills (Credit: Getty Images)

Art dealer Margo Leavin is seeking a buyer for her 8,500-square-foot home on La Brea Terrace in the Hollywood Hills, the Wall Street Journal reported. The property is listed at $15 million.

Sitting atop 1.8 acres, the two-story home has five bedrooms, seven bathrooms, a swimming pool with a spa and an outdoor kitchen. Floor-to-ceiling windows provide views of the hills through Downtown.

Leavin purchased the art-deco inspired, contemporary home in 1992 for $1.56 million, property records show.

Brett Lawyer of Hilton & Hyland has the listing.

Leavin, 81, made a name for herself when she opened her eponymous art gallery in 1970, representing notable artists from both coasts. In 2016, nearly three years after she closed her gallery, she cashed in $40 million when she sold her West Hollywood gallery and four other contiguous buildings to a company tied to Megan Ellison, the daughter of Oracle co-founder Larry Ellison and the founder of Annapurna Pictures. [WSJ] – Natalie Hoberman

(Credit: Getty Images)

From TRD New York: Your building’s package room? Yeah, now Amazon owns that, too.

In an attempt to streamline delivery, Amazon has made deals with some the nation’s biggest landlords to install Amazon locker systems in building package rooms, the Wall Street Journal reported.

Amazon now has contacts with the owners of roughly 850,000 units in thousands of properties across the U.S. For instance, AvalonBay Communities, Equity Residential, Greystar and Bozzuto Group are all on board. Under the locker system, landlords pay about $10,000 to $20,000 to purchase the lockers – about half of the cost they had previously been asking — which can be marketed as an amenity to residents.

Building staff spends a large amount of time dealing with packages for residents. Amazon argues that the new fully automated system will save labor and building managers money, while increasing convenience for residents.

But Amazon isn’t the only retail giant looking to simplify package delivery and pick up. Walmart’s online shopping platform Jet.com is teaming up with real estate startup Latch to make it easier for tenants in non-doorman buildings to accept packages ordered online via a keyless entry system free of charge in lobbies. [WSJ] – Christopher Cameron 

1111 Sunset Boulevard (Credit: Google Maps, 1111sunsetblvd.com)

Much to the chagrin of William Pereira-enthusiasts, Palisades Capital Partners is moving forward with its plan to redevelop the former Los Angeles Metropolitan Water District headquarters in Echo Park.

The developer tapped the architecture firm SOM and the landscape architecture firm James Corner Field Operations to redesign the 5.5-acre property at 1111 West Sunset Boulevard for its large mixed-use project, Urbanize reported.

Two William Pereira-designed buildings will be torn down to make room for the new complex, which is likely to include housing. The buildings, most recently used to house the Holy Hill Community Church, failed to receive landmark status last year.

But local developer Yuval Bar-Zemer of Linear City, which primarily develops in the Arts District, was hoping the firm would take a different course – one that resembled its own in 2014. He circulated a petition to get the building protected from demolition.

Linear City, led by Bar-Zemer and Leonard Hill, resurrected an adjacent, William Pereira-designed building three years ago into what is now known as the Elysian tower. As an homage to the notable architect, the developers retained the original structure’s characteristics and design as they repurposed the worn-down property into apartments.

SOM designed several prominent projects in the region, including the Pen Factory in Santa Monica and Desmond in South Park. James Corner Field Operations, along with Frederick Fisher and Partners, is designing Pershing Square Renew.

Palisades has been keeping busy on other parts of the county, as well. The firm is also working on the 19-unit AIRE condos in Santa Monica, the 56-unit Liddel at 10777 Wilshire Boulevard and a mixed-use structure at 631 Wilshire Boulevard. [Urbanize] – Natalie Hoberman

Betty Warner and Stanley Sheinbaum with the property at 345 North Rockingham Avenue (Credit: The Salty Shutters, Washington Report via the Sheinbaum family)

The longtime home of the late Betty Warner, daughter of Warner Bros. Pictures’ Harry Warner, and her late husband, activist Stanley Sheinbaum, just hit the market for $16.5 million, The Real Deal has learned.

Spanning over 7,500 square feet, the one-story ranch estate on North Rockingham Avenue in Brentwood boasts six bedroom and six bathrooms. Amenities include an art studio, a heated swimming pool and a manicured backyard.

The 1.2-acre property has been in the family’s hands for nearly 30 years.

Nick Segal and Richard Stearns of Partners Trust share the listing with Michael Hiatt of Sotheby’s International Realty.

Warner, a prolific painter and sculptor who passed away in August, married her second-husband Sheinbaum in 1964. The two participated in anti-war efforts during the Vietnam War and often mingled with world leaders and celebrities. Bill and Hillary Clinton, Norman Lear, Barbra Streisand and Warren Beatty are among some of the prominent figures said to have spent time in the home.

Blake Hutcheson and Hudson Yards

From TRD New York: Foreign banks held $71.6 billion worth of commercial real estate loans backed by U.S. properties during the second quarter of the year, a sign many point to as proof there’s still confidence in the overall economy and market fundamentals.

That figure is up from $59.3 billion in the second quarter last year and $38.3 billion at the same point in 2015, according to data from Trepp reported by the Wall Street Journal.

Overseas banks have stepped up to fill a void left by domestic lenders dealing with tighter regulations in the wake of the financial crisis, and traditional private equity investors like pension funds that had to write down a lot of assets in the wake of the Great Recession.

Other foreign investors, like Oxford Properties Group, simply can’t push out enough capital in their home markets.

“You can very quickly grow out of Canada,” Oxford Properties CEO Blake Hutcheson said. “Most of our growth has been in foreign markets.”

Overall spending by foreign investors on U.S. commercial real estate increased by 39 percent to $4.1 billion in the second quarter of 2017 from a year earlier, according to Real Capital Analytics.

And over at the Hudson Yards megaproject, which Oxford is developing with the Related Companies and Mitsui Fudosan America, most of the debt and equity capital comes from overseas.

That foreign participation could be read as a sign of “an increased confidence that the business cycle is not likely to roll over and therefore the underlying economics of projects like these remains viable,” said Larry Hatheway, chief economist at the global asset management firm GAM Holding AG. [WSJ] – Rich Bockmann

Sid Bernstein and 7529 Franklin Avenue (Credit: MLS, Getty Images)

A home with enough entertainment history to warrant its own star on Hollywood Boulevard is now up for sale.

The former home of legendary producer and promoter Sid Bernstein — which also appears in the opening sequence of James Dean’s 1959 film “Rebel Without a Cause” — is being shopped off-market for $4.4 million, The Real Deal has learned.

Situated right near Runyon Canyon on Franklin Avenue, the two-story home has five bedrooms and four bedrooms across 4,400 square feet of living space. The classic Southern Colonial property includes a gym, lush landscaping, an outdoor kitchen, a swimming pool and a sunroom.

The home last traded for $2 million in 2010, when Cindy Nelson-Mullen and Michael Taverna, executives at film distribution and production company MonteCristo International Entertainment, acquired the site, records show.

Darian Robin of the Agency has the off-market listing.

Bernstein, who passed away in 2013 at age 95, is best known for bringing the Beatles to mainstream America. He was also instrumental in the success of the Rolling Stones, the Moody Blues, Frank Sinatra and Tony Bennett.

Rendering of proposed redevelopment for the former Orange County Register headquarters, with Jeff Bezos (Gensler via LAT/Getty)

With cities throughout the nation competing for Amazon’s second headquarters, Southern California is refusing to be left behind.

At least five cities in the sunny region are offering up bids to convince chief executive Jeff Bezos to move his company’s second headquarters to their area, the Los Angeles Times reported. The push comes after Bezos announced the e-commerce giant was looking for new office digs last month.

The contest has attracted Irvine, Santa Ana, San Diego, Los Angeles and Pomona, in addition to several other cities in the L.A. County. Mayor Eric Garcetti, who would not disclose which sites are in the bid, has repeatedly supported the efforts. Governor Jerry Brown even wrote a letter to the CEO vouching for his state. Los Angeles County Economic Development Corp. is coordinated the regional effort.

Irvine Co., chaired by the richest real estate mogul in the country, Donald Bren, is expected to submit a combined bid with the city of Irvine. Other potential sites include the former Orange County Register headquarters near the 5 Freeway, and a portion of Boeing’s Huntington Beach campus.

But the online retailer is mainly searching for tax credits in its location scouting, and California isn’t likely to provide the most appealing package. The company also said it is looking for top-notch university systems and enough land to accommodate 8 million square feet and 50,000 employees.

In his letter to Bezos, the governor mentioned Amazon could qualify for up to $200 million as part of the California Competes Tax Credit program and up to $100 million in workforce training funds. A multi-agency “strike team” would also help the company speed through permits.

That’s pea-sized compared to New Jersey’s $7 billion tax incentive package offered. Cities are getting creative with their proposals, as well. Most of the main buildings in New York City will light up orange on Wednesday evening to show support for the city’s bid, one economic development group in Tucson sent Bezos a 21-foot-tall cactus and the mayor of Kansas City, Mo. even purchased and reviewed 1,000 items from Amazon. [LAT] – Natalie Hoberman

Tamar Braxton of R&B group “The Braxtons,” and her producer husband Vincent Herbert, have listed their 13,700-square-foot mansion at Prado De La Felicidad in Calabasas for $15 million, the Los Angeles Times reported.

The home has seven bedrooms, 11 bathrooms, a theater room, a gym, a recording studio and a wine cellar. Manicured lawns stretch along the custom-built home, leading to a large swimming pool and spa in the backyard. A garage fit for 15 cars completes the residence.

The couple purchased the home for $10.5 million in 2013, property records show.

Marc and Rory Shevin of Berkshire Hathaway Home Services have the listing.

The Braxton-Herbert duo currently have their own reality show, “Tamar & Vince. Its fifth season is scheduled to air in November. Rumors of the couple’s divorce (fueled by claims of Herbert’s infidelity) and financial duress have been circulating gossip blogs recently. [LAT] – Natalie Hoberman

The 200-key Tommie, slated to break ground soon at 1400 Cahuenga Boulevard in Hollywood, will target millennial professionals, Simon Ha of Steinberg Architects told TRD.

From the latest issue: It’s been a record year for tourism in Los Angeles — LAX saw nearly 57 million visitors pass through in the first eight months of 2017, according to airport records — and the hotel market is still growing, experts told The Real Deal.

Yes, there were whispers of oversupply last year, when 11,120 rooms were in the pipeline, according to a TRD analysis in September 2016. Some of that product was delivered before the end of that year, and Los Angeles has opened another 4,700 rooms so far in 2017 with another 5,209 still under construction, according to Joshua Emory, a principal at real estate capital advisory firm Primrose Capital.

All that new inventory continues to make lenders squeamish about issuing traditional construction loans for new projects in the immediate future. But commercial brokers argue that conventional wisdom doesn’t apply in this market. “There is a lot of product coming on line, which could look like oversupply,” said Mike Condon Jr., an executive managing director at Cushman & Wakefield. “But there’s been a paradigm shift, especially in Downtown L.A. Historic numbers and data are now not nearly as relevant as forward-looking data.”

Some reports do support that optimism. Hotel investment in L.A. hit $1 billion in the first half of 2017, a 109 percent increase from $479.4 million in the first half of 2016, according to CBRE’s H1 capital markets report. As of July, average daily rates were up 2.4 percent over the same time last year, to $190.42. RevPAR (revenue per available room) in Los Angeles County was relatively flat, decreasing just 0.5 percent to $163.44 in July from the same time last year. Occupancy dropped slightly, by 1.4 percent, but that could be attributed to the increased inventory.

Both Downtown L.A. and Hollywood are seeing rapid changes in terms of street-level attractions and density, which is cultivating interest from the hotel market. Though Hollywood, like much of the city’s Westside, is challenging for developers seeking entitlements, its access to entertainment and transit makes it very attractive to the hospitality sector. Downtown L.A. is similarly well positioned, and it offers a more streamlined entitlement process.

The two increasingly pedestrian-friendly neighborhoods have drawn business travelers away from the Westside and Santa Monica, where many traditionally stayed, sources said. Now, business travelers are looking to utilize amenities in a freshly made-over Downtown. And they won’t be staying in the drab, utilitarian sorts of suites they’d encounter elsewhere. “There’s a move away from the ‘cookie cutter’ brand hotel,” said Joshua Emory of Primrose Capital.   

Architecture, planning and design firm Steinberg, which has multiple hotels in the pipeline, is looking to break some of the molds. The firm is working on three hospitality properties in the burgeoning “hotel district” along the corridor at Cahuenga Boulevard and Selma Avenue in the heart of Hollywood: the 200-key Thompson Hotel, which is under construction, the 200-key Tommie Hotel, which breaks ground soon, and the 179-key Godfrey Hotel, which is in the design phase.

Chicago-based real estate investment, development and management firm Oxford Capital hired Steinberg to design the Godfrey, which will feature 230-square-foot rooms that are geared toward business travelers.

The Tommie Hotel — “designed with a WeWork-style ground floor, maybe a coffee bar,” according to Steinberg architect Simon Ha —will cater to young professionals. Its rooms will be only about 200 square feet. The Thompson Hotel will target a higher per-night rate with luxury amenities and larger rooms.

The positioning along that Cahuenga Corridor in Hollywood primes hotels to take advantage of proximity to major entertainment industry companies also moving into the neighborhood. Netflix moved its offices from Beverly Hills to Hollywood this year. It joins BuzzFeed, Viacom and Emerson College — with its futuristic Sunset Boulevard campus — in establishing a presence in the heart of Hollywood.

Meanwhile, over in Downtown L.A., where hoteliers have been drawn to the inventory of historic buildings, the spotlight’s on luxury boutique hotels. Adaptive reuse has been the “sexy” route for those hotel developers, but Condon is starting to see the remodeling trend lose steam.

“We are doing a little less of those now, because of the price. Those buildings have a lot of expensive challenges,” he said.

Also, most of the historic buildings are already spoken for, and there’s a finite number of them in the area.

“We’re at a point where the values of those buildings just don’t pencil for financing,” Condon said. Going forward, he said, expect to see more ground-up development in the area, which offers more bang for the buck. And those builds will be on the smaller side. “You’re not going to see 70-story towers. The sweet spot on boutique hotels is 150 keys. The high end is 250 keys,” Condon added.

Major projects coming on line Downtown include Oceanwide Plaza, by Beijing developer Oceanwide Holdings Company, which will include the 53-story, 184-key Park Hyatt Los Angeles and Residences designed by Studio Munge. Scheduled to open in 2019, the project also features a 66,000-square-foot open-air retail galleria, landscaped gardens, a pool with outdoor cabanas, and a 2-acre park 100 feet above street level with gardens, a jogging track, basketball court, pools and spa, and two dog parks.

Steinberg is remodeling Relevant Group’s Morrison Hotel, famous as the namesake location of the Doors’ album cover. The luxury boutique hotel will retain its look, with historic features to be restored.

Hollywood presents more challenges when it comes to new projects. After all, it’s the birthplace of the anti-development Measure S, which failed in the March 7 election. It makes for a contentious environment for proposing a new project. 

“Everything is contested … It creates a smaller pool of developers who are willing to go in and take the risk. Seasoned developers understand the risk, so they price it in and schedule for it,” Ha said.

When it comes to construction financing, going forward expect to see an increase in higher-rate debt funds — an alternative source of funding — rather than bank financing, according to Emory of Primrose Capital.

“Most banks are tapped out in terms of new hotel loan allocation,” he said. “Or they’re just cautious and want to wait and see absorption.”

But there should soon be plenty of evidence to bolster confidence in the L.A. hotel market, if commercial brokers are to be believed.

“There are a lot of under-the-radar deals that are percolating,” said Condon. “I fully expect there to be more gas thrown on the fire and to hit another wave of strong acquisition appetite in the near term.”

From left: Madison Capital’s Richard Wagman, Colliers’ Brad Mendelson, Brookfield’s Michael Goldban, Eastern Consolidated’s Robin Abrams and Amazon Books in the Time Warner Center (Credit: Getty Images)

From TRD New York: Experiential retail is touted by many as an antidote to the disruption wrought by the internet and e-commerce. But some of that retail isn’t providing much of an experience.

“Amazon’s a great example. They put almost every bookstore out of business and then they opened up a bookstore in Time Warner Center and it’s horrible,” Colliers International’s Brad Mendelson said Wednesday afternoon at the Real Estate Board of New York’s member’s luncheon.

“Amazon said you have to see our store at Columbus Circle. It’s a real experiential store,” Madison Capital managing partner Richard Wagman added. “I walked into the store and I was like, actually, it’s kind of a shitty Barnes & Noble.”

Mendelson said he’s been busy in Times Square – which led retail leasing activity in the third quarter, according to CBRE – where Gap and Old Navy have been putting the finishing touches on their new stores at 1514 Broadway. But the broker, who represented landlord Bow Tie Partners in the deal, said the tenant didn’t elevate the space to the kind of destination many feel are needed to make a statement in today’s retail environment.

“Old Navy opened up and it looks like they’re on 34th Street,” Mendelson said. “We think they missed an opportunity.”

REBNY’s panel, which was moderated by Eastern Consolidated’s Robin Abrams and included Michael Goldban of Brookfield Office Properties, touched on many of the challenges facing the industry as it deals with declining rents and a glut of availabilities.

The panelists were split on whether the current challenges are cyclical (a matter of the normal climb and fall of rents) or secular (having to do with larger forces outside the real estate industry).

They agreed, though, that landlords have been getting more creative in providing tenants with financial incentives in order to push up their rents, a trend The Real Deal reported on in September.

“That was landlords buying up the rents because they need to get a particular number,” Abrams explained.

“There have been financially engineered transactions where rents don’t make any sense,” Mendelson said. “And I talk to the bankers who finance these deals and they’ve become aware of this and they’re not loaning at the levels they used to loan. If they’re loaning at all.”

Concept Arts and Jaime Lee of Jamison

Advertising agency Concept Arts, which created campaigns for “La La Land”, signed a long-term lease for approximately 31,500 square feet of space at Jamison’s Harbor Building at 4201 Wilshire Boulevard in Park Mile, the landlord announced on Thursday.

The agency — which creates print, A/V, digital and social campaigns for films that have included “Straight Outta Compton” and “Wonder Woman” — will relocate its headquarters from the Hollywood building at 6422 Selma Avenue, which it has owned and occupied since 1989. It will move in the first quarter of 2018.

The historic Selma building, a 6,500-square-foot brick commercial building built in 1909, is still under Concept’s ownership, property records show. It is not known whether it will be sold.

Under the terms of the lease, Jamison will build out the majority of the fifth floor for the agency, the landlord said in a statement. The creative office space will include a combination of private offices, meeting rooms, a photo studio, collaborative work spaces and soundproofed editing rooms.

Jeffrey Resnick and Ben Silver of First Property Realty Corporation represented Jamison in the transaction. Marc Bretter of Cresa repped Concept Arts.

This is the second entertainment company to lease space at the six story, 258,000-square-foot Harbor Building recently. Last year, global entertainment company Entertainment One signed a long-term lease for approximately 26,000 square feet to house its reality television and music divisions in the building, which is currently undergoing a capital improvement program that will upgrade its lobbies, corridors, restrooms, creative office spec suites and automated parking systems, according to Jamison’s release.

The Harbor Building was built in 1958 for J. Paul Getty’s Tidewater Oil Company.

Jamison, run by Dr. David Lee, was once L.A.’s biggest office landlord, but the company has shifted its focus to multifamily development projects in recent years. Dr. Lee’s daughter, Jaime, heads up its leasing operations, and has sought to upgrade its older spaces to attract fresher tenants.

Tony James and the Seattle skyline

From TRD New York: The U.S. real estate market may have slowed down, but Blackstone Group president Tony James still sees plenty of opportunities for profit.

“Real estate is a gargantuan market,” he said during the company’s quarterly earnings media call Thursday. “There are always undermanaged assets.”

Blackstone has been investing heavily in logistics real estate, hoping to capitalize in the rise of online retail, and James indicated more acquisitions are possible. “There’s just not near enough of it in any metropolitan area,” he said. He also pointed to senior living, mixed-use neighborhoods and markets that lack housing, such as Seattle and Northern California, as investment opportunities.

Blackstone’s real estate assets under management grew to $111.3 billion in the second quarter, up 9 percent from $101.9 billion a year ago. Its core-plus portfolio, which includes Stuyvesant Town-Peter Cooper Village, grew 36 percent to $18 billion.

In May, Blackstone won a $20 billion commitment from Saudi Arabia’s sovereign wealth fund for a new infrastructure investment fund, but James said it may be a while before the money gets spent. Saudi Arabia’s commitment depends on Blackstone raising additional cash from other investors, and the firm only just began marketing the fund, he said.

According to James, the fund does not depend on the federal government passing an infrastructure spending package.

“There’s a big opportunity right as we stand today,” he said. “It doesn’t take a genius to see the crumbling infrastructure of the United States and the massive need for new investment.”

Century Plaza Hotel and Matthew Perry with Ronald Reagan (Credit: The Century Plaza, Getty Images)

Back in the 1960s, Hollywood elites including movie stars, business moguls and even the former president of the United States flocked to the area between Beverly Hills and Santa Monica, known as Century City.

Now, developers are increasingly turning to the neighborhood’s glitzy history to market their new high-rise properties, which differ from the sprawling estates that characterize Los Angeles, the Wall Street Journal reported.

The roughly 180-acre neighborhood suffers from a reputation of being office-focused, rather than family friendly, characterized by aluminum skyscrapers and a lack of basic neighborhood amenities like public parks.

But neighborhood residents and developers in the region are seeing other benefits in the area.

Early buyers at Related Companies-redeveloped the Century condos at 1 W. Century Drive are now witnessing their profits double as they sell to celebrities like Matthew Perry and Candy Spelling.

Down the street, developer Woodridge Capital Partners is undergoing a $2.5 billion redevelopment of the Century Plaza Hotel that will include a 394-key Fairmont Hotel and over 268 condos spread among two 43-story towers. Miami-based developer Crescent Heights is looking to get a piece of the pie, as well, and recently opened a 40-story rental building dubbed Ten Thousand.

One retail developer has taken quite a gamble on the area. Shopping mall giant Westfield recently poured $1 billion into its 1960s-built Century City Westfield Mall, which will now include extravagant amenities and bring nationally-acclaimed restaurants to the area. [WSJ] – Natalie Hoberman