The retail strip at 1100 South Main Street

For Jade Enterprises, the residential market doesn’t seem to be losing its luster.

The prominent Los Angeles landlord filed a plans Wednesday to bring a 379-unit mixed-use residential and retail complex to an underused site in the Fashion District, according to city documents.

The development calls for an eight-story building on the corner of 11th Street and South Main Street, which is now the site of a retail strip. The 1.3-acre site is currently zoned for manufacturing. Jade acquired the bulk of the eight-parcel site as part of a $24 million portfolio buy last August, according to CoStar.

Of the 379 units, about 42 will be reserved for very low-income households.

A spokesperson for Jade would not comment on the plans.

The developer has a number of major projects in the works, including the nearby “Emerald,” which calls for 154 apartments and 10,000 square feet of commercial space at 1340 South Olive Street.

Jade has long been a major landlord in Downtown’s commercial submarket but recently began investing in residential projects, too. In its gem-themed multifamily series, there’s also the 410-unit Onyx in South Park and the 159-unit Topaz, which is under construction in the Historic Core.

Renderings of the project at 11800 West Santa Monica Boulevard by Lorcan O’Herlihy Architects

If it all comes down to money, the pro-development lobby has a leg up in Santa Monica.

Opponents of LUVE, the ballot initiative that would require all developments taller than two stories to gain community approval by popular vote, had raised $947,000 as of late September, thanks to private residents and deep-pocketed developers, according to the Santa Monica Lookout.

By comparison, Residocracy, the group behind the measure, had raised just $46,000, according to disclosure statements.

The two main opposition groups are Santa Monica Forward and Housing and Opportunity for a Modern Economy (HOME). The former had nearly 170 donations amounting to $585,000. Most contributors gave about $100, but there were a handful of development firms that wrote hefty checks, including Hudson Pacific Properties and Ocean Avenue LLC of Miramar Hotel, both of which gave $49,000. HOME had three main donors: NMS Properties, Century West Partners and the owner of the proposed mixed-use project at 525 Colorado Avenue. Century West gave $75,000.

Residocracy’s funds were raised mostly through small donations but include three larger contributions: $5,000 from investor Ishak Bibawi, $5,000 from Venice businessman Mark Sokol and $3,135 from retiree Thomas Epley. [SML] — Cathaleen Chen

From left: Douglas Harmon, Adam Spies and Brett White

From the New York website: New York’s most successful investment sales brokers, Eastdil Secured’s Doug Harmon and Adam Spies, are jumping ship to Cushman & Wakefield, sources told The Real Deal.

Harmon and Spies, who joined Eastdil in 1993 and 1999 respectively, have topped TRD’s list of the city’s most successful investment sales brokers for years now. In 2015, Eastdil sold a record $22.7 billion in New York City properties, including the $5.3 billion sale of Stuyvesant Town and Peter Cooper Village to Blackstone Group and Ivanhoe Cambridge. Their deals raked in what TRD estimated to be $65 million to $80 million in commission fees. In 2014, Eastdil Secured brokered nine out of the city’s 10 biggest investment sales.

Cushman, led by CEO Brett White, had been looking to form a large capital markets group. The firm has ranked a distant third when it comes to New York investment sales, doing an estimated $3.4 billion in deals in 2015, according to TRD’s ranking. That’s after acquiring Massey Knakal Realty Services for a reported $100 million at the end of 2014. In 2014, Massey Knakal did an estimated $3.8 billion in deals, while Cushman did just $875 million that year.

The Eastdil team was hired by an executive “at the highest level,” sources said, and senior executives at Cushman were informed of the hires last month. Along with Spies and Harmon, Kevin Donner is also moving over.

At Cushman, Harmon and Spies will both have the title of “Chairman, Capital Markets,” while Donner will be an Executive Managing Director.

The New York Post’s Lois Weiss first tweeted the news of Harmon’s move.

New York-based Eastdil Secured is a wholly owned subsidiary of Wells Fargo Bank. Unlike many other brokerages, the firm uses a salary-and-bonus structure prevalent within financial firms.

Sources said the brokers’ sudden exit is likely due to concerns over their compensation packages amid the recent fraudulent accounts scandal at Wells Fargo. Late last month, news broke that the bank’s employees opened 2 million unauthorized bank and credit card accounts. Wells Fargo fired over 5,000 employees in the wake of the scandal, and its stock has taken a pummeling.

Representatives for Eastdil could not be immediately reached.

For the past five years, TRD has ranked Harmon and Spies at the top of New York City commercial sales. In the past few years, the pair have put considerable distance between themselves and their nearest rivals, CBRE’s Darcy Stacom and Bill Shanahan.

So far this year, Harmon and company represented developers Chetrit Group and Clipper Equity in the $1.4 billion sale of the Sony Building and represented Coach in the sale of its equity stake at 10 Hudson Yards, a deal valued at nearly $1 billion, according to CoStar Group.

The L.A. skyline (credit: Getty Images)

We’re living in a global society, at least when it comes to real estate investment.

A new report by commercial real estate brokerage Cushman & Wakefield ranking the top 25 cities for global investment shows just how much capital — $1.35 trillion — crossed global borders in the year ending in June. Predictably, cities such as New York and London benefitted from the lion’s share of those investment dollars.

But, looking past the obvious, the report contains a few gems of information that may be unfamiliar even to those well-versed in the global market. Read on for a closer look.

1. Los Angeles is gaining in the global real estate pecking order
Los Angeles ranks as the No. 2 city in the world by total investment volume (excluding land deals), with $40.82 billion in dollars spent in the year ending June. That’s a 9.8 percent uptick year-over-year. It was second only to New York, which saw $82.56 billion in investment. Investment in London actually dropped 31.2 percent to $39.38 billion, putting the British city in third place. Overall, the U.S. increased its hold on the list, with 16 of the top 25 cities for global investment located in North America.

2. Much of the growth in global sales volume can be attributed to land deals in China
The global investment market remained mostly stable over the year ending in June, with sales volume inching up by just 0.5 percent to $1.35 trillion. Those numbers doesn’t necessarily indicate stability in the U.S., however, since much of that growth can be attributed to Asia, where investors ate up developable land deals in particular. When land deals are excluded from the data, it is clear that sales volume actually dipped globally. It dropped by 5.7 percent to $919.7 billion, according to the report.

3. The U.S. is still top dog in outgoing investment
The top five countries countries by outgoing global investment were the U.S. ($51B), China ($16.8B), Singapore ($16.3B), Canada ($14.7B) and Qatar ($10.3B.) Other key investors included South Korea and Hong Kong, which upped their investment levels by 66 percent and 76 percent respectively in the year ending in June, according to the report.

4. Africa is the fastest growing region for cross-border investment
The region with the fastest growing stream of international investment last year was actually Africa, which upped its investment levels by a whopping 135 percent thanks to increased demand from African buyers. All in all, the cross border share of the global market (excluding developable land), rose to 28.3 percent of total transactions, from 27.7 percent a year prior.

The renovated foyer of the Spelling mansion at 594 South Mapleton Drive (Credit: Hilton & Hyland)

It may not have a sexy grotto or a film credit in “The Godfather,” but the Spelling mansion has its own secret weapon — unlike some other recent L.A. mega-listings, it may actually be worth its asking price.

The 56,500-square-foot Holmby Hills mansion owned by British heiress Petra Ecclestone Stunt hit the market Tuesday for $200 million, or roughly $3,500 a square foot. The number is certainly jaw-dropping. Yet, if the property sells for its listing price, it would be a price-per-square-foot bargain compared to the Playboy Mansion, which sold to Daren Metropoulos over the summer for $5,250 a square foot.

Luxury estate experts told The Real Deal that the 123-room Spelling mansion sale will likely steal the title from Hugh Hefner’s party palace to become L.A.’s priciest ever home trade. 

“It’s an epic mansion that’s solidly built,”said Ben Bacal of Rodeo Realty, who has been inside the renovated abode. “It’s elegant but it has a sexy, rock n’ roll feel.”

The renovations are the selling point that differentiates the property from its peers in the ultra-luxury category, and make the 1988-built French chateau worth its ask, Bacal said.

“It’s 100 percent worth it,” he said.

Petra Ecclestone Stunt and the mansion (Credit: Wikipedia Commons, Getty)

The renovations have their own backstory. Dubbed the Manor by the estate’s original proprietors, Candy and Aaron Spelling, the property hit the market for the first time in 2011, five years after Aaron Spelling’s death. Stunt, then 22 years old, plunked down $85 million to buy it — and instantly became a fixture on the L.A. social scene, at least for a hot second.

The heiress, who has since married businessman James Stunt, quickly got to work to rid the property of Candy’s infamous kitsch esthetic, hiring 500 employees to transform the property, according to an interview she gave to W Magazine in March 2012. She installed a giant exotic fish tank in the study, a bowling alley in the basement and a spa with three hair stations. Celebrity designer Gavin Brodin, who is also British, led the makeover.

Although the exact amount remains undisclosed, Bacal estimated that Ecclestone’s renovations cost at least $30 million. Hilton & Hyland’s Rick Hilton, who has the current listing for the property with colleague David Kramer, told TRD the total cost was probably higher.

(Credit: Hilton & Hyland)

“She’s made it brighter and added more contemporary tones,” Hilton said.

The sale of the Playboy Mansion played a part in deciding the value of the Spelling manor, he said. Cut down from its listing price of $200 million, that property sold for $105 million — with the stipulation that Hugh Hefner be allowed to remain on site until his death.

“We feel it’s a fair price given the location, the amount of land, the size of the house and how hard it would be to recreate it,” he said. “It’s in a better location than the Playboy Mansion, which also needs everything redone.”

But if you ask Compass broker Greg Harris, the Spelling mansion’s most valuable asset is its size.

“She’s selling a big house, she’s not selling history,” he told TRD.

Still, some said $200 million may be a reach. There’s only a handful of people in the world who could afford it, after all. Hilton said the firm’s marketing efforts will include reaching out directly to domestic and international billionaires.

“It’s a reasonable ask, but I don’t think they’ll get it,” said Michael Nourmand of Nourmand & Associates. “I think they’ll get something in the $150 million to $170 million range.”

That would still be record-breaking, of course.

“I have no doubt in my mind it would still be the most expensive sale in L.A.,” Nourmand said.

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From left: Brookfield’s Manhattan West project, The Empire State Building, the crown jewel in the ESRT portfolio and London’s famed Harrods department store

From the New York print issue: Speaking at a conference hosted by Euromoney Magazine in Qatar in 2014, Sheikh Abdullah bin Mohammed bin Saud Al Thani called for a moment of silence.

“Silence at times may be golden,” he told the business executives at the event, which took place the month before he was named chief of Qatar’s notoriously secretive sovereign wealth fund. “But I assure you, ladies and gentlemen, that the noise we are making here in Qatar is already being heard around the world.”

Indeed, two years later, the Qatar Investment Authority has made more than enough noise in the U.S. real estate market to draw the industry’s attention.

While QIA spent years investing quietly in the U.S., through hedge funds and private equity funds, it has recently made more splashy purchases and increased its profile in the process.

In August, the sovereign wealth fund bought a nearly 10 percent interest in Empire State Realty Trust (ESRT), the publicly traded real estate investment trust that owns the Empire State Building, as well as office and retail properties such as 111 West 33rd Street, 501 Seventh Avenue and 250 West 57th Street.

And the Empire State Building play was just the latest in the QIA’s aggressive push into New York.

Over the past two years, the fund has bought $3.78 billion worth of Manhattan properties, not including the ESRT investment, according to data firm Real Capital Analytics. That includes an undisclosed stake in Manhattan West, Brookfield Property Partners’ under-construction, $8.6 billion mixed-use project on the Far West Side. It also opened a Manhattan office last year.

Meanwhile, on the West Coast, QIA recently partnered with Santa Monica-based REIT Douglas Emmett on its $1.34 billion purchase of a California office portfolio from the Blackstone Group.

The chief of QIA, Sheikh Abdullah Bin Mohammed Bin Saud Al Thani

But despite these massive investments and its partnerships with some of real estate’s household names, QIA largely remains a mystery. And its business associates — perhaps reticent to anger the fund and lose out on investment dollars — have been very tight-lipped about how it operates.

In some ways, the fund has become even more private since it’s eaten losses recently on failed (non-real estate) investments in companies such as the commodity-trading and mining giant Glencore and German car manufacturer Volkswagen.

A 2014 survey of sovereign wealth funds by GeoEconomica, a political risk-management firm based in Switzerland, found QIA, which doesn’t publish annual reports or disclose how much money it manages, to be the least transparent of all sovereign funds.

“They used to be very talkative about what deals they did, but now they’re working under the radar,” said one of QIA’s Gulf-based advisers, who spoke only on the condition of anonymity, for fear of losing the fund’s business.

“They used to tell the whole world what they bought,” the adviser said. “Now, they realize nothing good can come of it.”

Lofty returns

While QIA’s operations may be an enigma, the source of its capital is not.

As the world’s biggest exporter of liquid natural gas, Qatar is one of the wealthiest countries on the planet. The riches can be seen on the skyline of the country’s capital city, Doha, which is dotted with luxury hotel and condo towers.

The QIA — created in 2005 by the country’s then Emir, or head of state, Sheikh Hamad bin Khalifa Al Thani, to manage oil and natural gas profits — reportedly controls upwards of $250 billion, though exact numbers are nearly impossible to come by.

Since Qatar has been run by the same family for more than 150 years, the QIA is essentially a family firm. Between 2008 and 2013, it was headed by Sheikh Hamad bin Jassim Al Thani, a member of the royal family known for his gregarious nature and flashy lifestyle. (According to the Financial Times, his name appeared in the Panama Papers in relation to an offshore entity designed to manage his $300 million yacht.)

Abdullah bin Mohammed — the chairman of telecommunications firm Ooredoo — was brought in after a brief stint by another chairman and is also a member of the royal family (he’s the half brother of the current emir). He is said to be more quiet and reflective than his predecessor.

But he has a big act to follow.

During the last financial crisis, the fund made big investments at steep discounts in a slew of trophy properties in Europe — including London’s famed Shard skyscraper and Harrods department store. Meanwhile, in Paris, QIA shelled out more than $600 million for a flagship retail property on the Champs-Élysées. It also bought stakes in banking behemoths Barclays and Credit Suisse.

“It’s really important to them to have assets on ‘Main and Main,’ very well located, no second- or third-tier assets,” said John Kim, an analyst at financial service firm BMO Capital Markets, who covers ESRT. “It’s stability and long-term upside.”

QIA gained access to large deals in Europe through its close ties with global leaders such as former U.K. Prime Minister Tony Blair and former French President Nicolas Sarkozy, according to news reports and TRD sources.

Sarkozy and the Qataris were so close, in fact, that after Sarkozy left office, the emir reportedly tried to woo the politician to set up a Europe-based private equity fund that would be backed by Qatar. Sarkozy also reportedly came under scrutiny by football governing body FIFA while in office, after allegedly hosting a private meeting with the crown prince of Qatar and representatives of French soccer club Paris Saint-Germain F.C. during which they colluded to name Qatar the host city for the 2022 soccer World Cup. Sarkozy has denied the claims, and there have been no sanctions.

And Qatar’s tax treaties with France and other European countries allowed the country to limit its tax burden on its property purchases there.

But a handful of QIA’s largest investments have recently nosedived.

Last September, a Financial Times analysis estimated that the fund had posted a paper loss of more than $12 billion in the third quarter of 2015 alone, thanks to hits it took on investments in Volkswagen and Glencore. Some of those stocks have since rallied slightly.

In the wake of those losses, investments in real estate, where downsides tend to be more limited, may seem like a safer bet, sources said.

“They may be looking at taking a more conservative approach to investing,” said Michael Maduell, president of the Sovereign Wealth Fund Institute, a Las Vegas-based research group. “Investing in real estate is more of a vanilla investment than investing in a complex private company.”

The Land of Opportunity

Still, QIA has hundreds of billions to spend.

And with so much cash lining its coffers, it’s no wonder the fund made such a splash when it announced it would be opening an office in New York last year.

The fund quickly set up an office at one of the city’s most prestigious — and expensive — commercial addresses, Sheldon Solow’s 9 West 57th Street. Rents at the building reportedly top $100 a foot.

Finance titans such as Bill Ackman, Stephen Schwarzman and Larry Fink all reportedly attended a launch party for QIA’s New York operation.

To be sure, the fund has been investing here for some time.

It’s previously partnered with Boston Properties and Kuwait’s sovereign wealth fund to buy (and later sell) the GM Building. But having an on-the-ground operation signals that it’s increasing its commitment to investing in U.S. real estate.

The fund has made no secret of the fact that its redirecting its attention from Europe to the U.S. and Asia — and political forces such as Brexit may only have accelerated that process.

Pam Liebman, CEO of the Corcoran Group, told TRD that the brokerage has been advising QIA on some of its New York investments.

When she flew to Qatar recently for business, the QIA pulled out the red carpet, even taking Liebman on a gyrocopter in the desert.

“They couldn’t have been nicer to us,” said Liebman, who posted a photo of herself in front of the aircraft on Instagram. “There isn’t a developer or someone who needs money in New York who doesn’t go through those doors.”

“Flying might not be all plain sailing, but the fun of it is worth the price.” – Amelia Earhart // Currently exploring sand dunes in a #gyrocopter! #UAE #Doha #abudabi #bahrain #desert #travel

A photo posted by Pamela Liebman (@pamelaliebman) on Feb 12, 2016 at 12:18pm PST

As for working with Abdullah bin Mohammed, she said: “When everyone sits in the room with him, he’s the king, literally. He sits down, and they sit down. When he speaks, no one contradicts him. There’s a respect thing.”

The fund has also tapped some established names in finance to steer the ship amid the unraveling of some of its recent investments. For example, it recently hired Phil Dunne, the former CFO of Citigroup Alternative Investments, as its own CFO, Bloomberg News reported.

But while investing in New York real estate may be safer than some of QIA’s recent bets, sources said it hasn’t been easy. That’s partly because the U.S. government doesn’t hold as much clout when it comes to major investments in real estate as its European counterparts. And when major public-private partnerships such as Hudson Yards do arise, they’re usually awarded to U.S.-based firms.

“When you’re dealing with U.S. private equity funds, they are usually selling all the big deals to American funds or banks,” said the QIA’s adviser. “There are so many buyers in the U.S., they don’t care about the Arab market. Whatever deals the Arabs got were always secondary deals. They tried to compete with U.S. funds to try to get assets and couldn’t.”

That might explain why QIA has taken such pains to align itself with companies such as Brookfield and ESRT.

“I would imagine the big allure with ESRT was the Empire State Building, but it was interesting that they made an investment in the company and not the asset itself,” BMO’s Kim said. “Part of the reason [for that], I think, is that ESRT wouldn’t sell a stake in the Empire State Building.”

QIA’s advisor agreed: “Qatar couldn’t beat people like Brookfield to deals, so they bought a stake in them to get access to those deals,” he said. “Qatar is looking to set up vehicles alongside big players in the U.S.”

Inside the Kim Sing theater at 718 North Figueroa Street (Credit: Kim Sing Theater, prabook.com)

Harrison Ford’s son just scored a tidy profit on the sale of the historic Kim Sing Theatre in Chinatown.

The design and fashion entrepreneur pocketed $3.3 million from the sale of the former vaudeville house and movie theater  — 11 times the $300,000 he paid for it in 2000.

Ford has been using the property on Figueroa Street as a furniture showroom and private residence, the L.A. Times reported. He spearheaded a massive renovation of the 12,500-square-foot space, adding an internal courtyard, retail space and an audio-visual room.

The four retail showrooms, where Ford featured the work of furniture designers, total 9,000 square feet, while the three-bedroom residential loft spans 3,500 square feet on two floors.

The buyer was Indra & Company, headed by Ash Pathi, which plans to use lease out the commercial space and use the loft for short-term stays and events.

Douglas Elliman’s David Kean was the listing agent. Indra was represented by Lindsay Rae Galbraith of Sotheby’s International Realty. [LAT] — Cathaleen Chen

Inside the flower market at 755 Wall Street (Credit: Yelp, c/o Diana L.)

The Southern California Flower Market, no longer fresh as a daisy, could be redeveloped into a mixed-use complex with affordable housing.

Council member Jose Huizar, of the 14th District, filed a motion last week to rezone the 3.8-acre site at 755 Wall Street for commercial use, paving the way for a new development, Urbanize reported.

The redevelopment of the site would “revitalize the area,” provide about 500 new jobs and generate tax revenue, the motion said.

The flower market would keep its operations on the ground floor, but the existing buildings are functionally obsolete, Huizar wrote. [Urbanize] — Cathaleen Chen

Average residential broker commission rates per country in 2015. Data source: Surefield

From the New York website: The U.S. is one of the most expensive countries to buy a house, partly because its real estate brokers receive some of the highest commissions around the globe, according to a new survey.

The U.S. ranks third out of 32 countries for average residential commission rates, with an average of 5.3 percent, a modest drop from 6.1 percent in 2002, according to the survey by the discount-brokerage firm Surefield.

In Mexico, which tops the list, brokers take home as much as 7.5 percent of a home sale, the Wall Street Journal reported. In Sweden, the U.K., Ireland and Singapore, brokers take home between 1.5 to 2 percent of the sale, while Italy and Spain come pretty close to the U.S., with averages of about 5 percent.

Most nations surveyed don’t have the concept of buyers’ agents, as is commonplace in the U.S. The commission is often split at least two ways, between the buyer’s and the seller’s representatives. In both Japan and Hong Kong, the two governments that introduced the two-agent system since 2002, average commission rates rose, the Journal reported, citing the survey.

Overall, commission rates have gone down since 2002, with the most dramatic decreases in Belarus and China, where rates dropped from 7.5 to 2 percent.

That’s because the Internet has made it easier for buyers and sellers to connect and consumers are getting savvier, Chad Syverson, a University of Chicago economist who consulted for Surefield told the Journal. “It’s gotten easier for people to find the other end of the market directly.”  [WSJ] — Chava Gourarie

Stephanie Younger

Venture capital-backed brokerage Compass is pressing on with its L.A. poaching spree.

The company has nabbed Teles Properties agent Stephanie Younger and her 21-person team for its new office in the Westchester-Playa del Rey neighborhood, the company told The Real Deal. 

Younger and her team closed more than $150 million in sales last year, making them the number one team at Teles Properties, according to Compass.

A spokesperson for Teles did not immediately respond to a request for comment on her departure.

“Teles is a wonderful place and it was a great place for me to grow my business over the past seven years but the Compass model is very interesting and I couldn’t help but stop and look at them,” Younger said. “I’ve always been someone who wants to be on the cutting edge.”

Younger specializes in the “Silicon Beach” region – Westchester, Playa del Rey and Playa Vista – as well as Culver City, Marina del Rey, and Mar Vista.

With the addition of the new office, Compass will now have five bricks and mortar locations in the L.A. region, including Beverly Hills, Malibu, Pasadena and Santa Barbara/Montecito. The firm recently announced it will move to a larger office on the Pacific Coast Highway in Malibu, and expand its Beverly Hills headquarters to more than 25,000 square feet on Wilshire Boulevard.

Compass would not comment on the exact location of the new office, since the deal has not yet been signed.

Petra Durnin and the Downtown skyline

How high can it go? That’s the question of the day in Downtown Los Angeles.

Rents have been on the rise in DTLA’s office market, but with a hefty vacancy rate relative to other submarkets, and new development rising, some analysts say rents won’t get higher.

“Rents will probably even out now,” Petra Durnin, CBRE’s director of research, told The Real Deal. “In Downtown Los Angeles, they’ve hit the ceiling.”

Rent

Asking rents increased by nearly 7 percent in DTLA, when compared with same quarter last year, to an average of $3.30 a square foot a month, according to third quarter data from CBRE.

It rose only 3 cents, however, when compared to last quarter’s average of $3.27, which some market experts see as a sign that things are slowing down.

Vacancy

Vacancy, meanwhile, remained relatively high Downtown, at 16.8 percent, compared with the Greater L.A. average of 14.3 percent. It barely dropped  from the 16.9 percent average last quarter, according to CBRE data.

Durnin said that DTLA’s vacancy rate has always been higher than most other submarkets, because of its size and the tenant downsizing that took place in the aftermath of the recession. The submarket’s equilibrium, she said, is about 16 percent vacancy.

The vacancy rate is even higher in Downtown’s Central Business District. When Bunker Hill and the Financial District are calculated separately from the rest of Downtown Los Angeles, as they were in Cushman & Wakefield’s third quarter report, they have the highest vacancy rate out of any submarket, at 19.2 percent.

Leasing

Sublease space in DTLA’s CBD has increased dramatically, according to the Cushman & Wakefield report, exceeding 135,000 square feet. That’s six times the amount that was up for sublease last year. This trend was not shared by other L.A. submarkets. Outside of DTLA’s CBD, sublease availability declined by 24.5 percent.

“Those subleasing tend to be tenants who have made other commitments to occupy new space and have term left on their existing lease,” Cushman’s market director Eric Kenas said in a statement.

Meanwhile, in Greater Los Angeles, leasing activity saw a 17 percent drop in the third quarter when compared to the average of the past 15 months — 2.79 million square feet, compared to 3.4 million square feet, according to the Cushman report.

“Leasing hasn’t been robust as it was in 2015, but it’s still been healthy. There’s very strong demand,” Durnin said.

Equity Residential’s Sam Zell and the C on Pico apartments at 12301 West Pico

Equity Residential wants to expand its Westside portfolio. Its latest order of business? Buy a brand new 94-unit complex on Pico Boulevard.

The Chicago-based firm recently bought the 95,000-square-foot building at 12301 West Pico Boulevard from developer Amoroso Companies for $42.5 million, or $452,100 per unit, according to property records.

Kevin Green, Greg Harris and Joseph Grabiec of Institutional Property Advisors (IPA), a division under Marcus & Millichap, represented Amoroso.

The developer acquired the land for $10.5 million in 2012, and built the project — dubbed C on Pico — in 2014, according to property records. It sits one block from the Bundy Expo line station.

Amoroso is working on another 90-unit complex at 1056, 1060 and 1066 South La Cienega Boulevard, TRD reported last month.

A rendering of Wanda’s One Beverly Hills project to the right, with a rendering of the existing Hilton hotel to the left, and attorney Gary Winuk (via Twitter)

California’s Fair Political Practices Commission has denied the request of Gary Winuk, a Sacramento attorney at the center of the development battle between Beny Alagem’s Oasis West Realty and Wanda Group’s Beverly Hills subsidiary.

“We found no evidence that the contributor is a foreign principal,” Galena West, the chief of the Commission’s enforcement division, said in a letter to Winuk, obtained by The Real Deal. 

Winuk had alleged that China’s Wanda Group was illegally “funneling money” into a campaign committee formed to oppose Alagem’s ballot measure. Winuk’s complaint to the commission was made public in the Los Angeles Times.

West said Winuk had not provided “evidence to substantiate the allegation that a foreign principal was the source of the money” given to the campaign.

“Therefore, the Enforcement Division will not open a case on this matter,” she said.

The campaign in question is “No on HH,” largely funded by Wanda Beverly Hills. It attempts to persuade residents to vote against the initiative that would allow Oasis West to bypass the usual city planning review process to build a 26-story condo tower that would become the tallest building in the city. If approved, it would sit next door to Wanda’s One Beverly Hills project.

The motivations of Winuk — who sent the complaint on behalf of Unite Here 11, a union that represents workers at Alagem’s Beverly Hilton hotel — have come under scrutiny. It wasn’t the first time Winuk had filed a letter against Wanda’s Beverly Hills project. He also sent a complaint on behalf of “anonymous citizens,” and many suspected a connection to Alagem’s camp. A spokesperson interviewed by TRD denied any ties, but the head of Wanda Beverly Hills recently gave an interview insisting a connection exists.

“The Beverly Hilton and some of the proponents of Measure HH have resorted to xenophobic language in order to try to discredit us and the One Beverly Hills project,” Rohan a’Beckett, the deputy GM of Wanda Beverly Hills, told the Hollywood Reporter. “There is only one entity that benefits from Mr. Winuk’s attempts to derail the One Beverly Hills project and bully opponents of Measure HH.”

The Ford Factory (via Shorenstein)

The Arts District is no longer “Waiting for Godot.”

Warner Music Group finally sealed the deal on a lease for the entire 257,000-square-foot Ford Factory building renovated by Shorenstein, Billboard reported Friday, closing a transaction that many see as the tipping point for the Arts District.

CBRE’s John Zanetos, Todd Doney, Rob Waller, Chris Penrose and Phil Ruhl represented the landlord, Shorenstein. Cresa’s Matthew Miller represented Warner.

The music giant’s lease at 777 South Santa Fe Avenue will begin in August 2017 and last for nearly 13 years with an option to renew for 10 years, according to filings cited by the L.A. Business Journal. The lease rate will begin at roughly $10 million a year, valuing the deal at upwards of $130 million.

The company’s build out will cost $40 million to $50 million, with Warner receiving a 75 percent rate abatement during construction.

Roughly two million square feet of office space is set to come online in the Arts District, and industry insiders have been saying the sealing of the Warner deal would make or break those other projects. Many were hesitant to be optimistic, after Buzzfeed backed out of a deal for the space at the eleventh hour last year.

Warner, which will relocate from Burbank, will be the Arts District’s first large-scale office tenant. It will move out of the structure it has inhabited on the Warner Bros. Studios for more than 40 years when the lease ends in 2017, and move in 2018, according to Billboard. It will also vacate the space it takes at Atria West in West L.A. and 185,000 square feet on Olive Avenue in Burbank.

Warner’s consolidation in the Arts District will serve as its West Coast headquarters. [Billboard] — Hannah Miet 

The site between 1601 and 1647 North Las Palmas Avenue

Another parking lot may soon bite dust.

Rick Selby of R. W. Selby & Company has filed a request to build an 86-unit apartment complex on the corner of Las Palmas and Selma Avenues in Central Hollywood, according to city documents.

Selby purchased the parking lot at 1601 to 1647 North Las Palmas Avenue under the entity J&J Hollywood LLC. Through that entity, he began to acquire the three parcels that make up the lot in the 1990s, property records show.

Selby & Company, a Brentwood-based developer and management firm, oversees student housing and apartment complexes in Nevada as well as Southern California.

A representative of the company could not be reached for comment.

One block away, Koreatown landlord Jamison Services is gearing up to build a 224-unit complex at 1718 North Las Palmas Avenue, paying $23.3 million for the already-entitled site in August, The Real Deal reported.

Current reader favorites:

1. Warner Music Group seals the deal at Shorenstein’s Ford Factory
2. Harrison Ford’s son sells historic Downtown theater for $3.3M.
3. Equity Residential acquires new 94-unit building on Pico for $45.2M
4. Warner Music lease is already having ripple effect on Arts District
5. Is the Spelling mansion worth its $200M ask?

2301 W. 120th Street

Red Sea Group, a Tel Aviv-based investment firm, has sold a Hawthorne data center for $79.5 million, or $276 per square foot, nearly double the $43 million it paid for it in 2002.

The former Northrop Grumman Corp. facility, at 2301 W. 120th Street, sold to Carter Validus Mission Critical REIT, a Kansas City-based non-traded real estate investment trust which invests in data centers and healthcare facilities, according to Real Capital Analytics.

The Israeli firm’s purchase of the 288,000-square-foot property 14 years ago marked its first foray into the Southern California real estate market.

The building dates back to 1963 and is leased by At&T.

Neither Red Sea nor Carter could be reached for comment.

The data center market has remained relatively stable in L.A. so far this year, with supply driven by companies such as CoreSite, Digital Realty and Equinix, according to commercial brokerage JLL. Demand remains relatively flat thanks to high power costs.

Rachel Torres at the news conference Monday (Credit: Jon Endow)

And so it begins. The Neighborhood Integrity Initiative’s opposition group — made up of developers, housing advocates, labor unions and L.A. neighborhood councils — launched their campaign Monday in a Lincoln Heights parking lot, one of 12 sites the city has proposed developing into housing for the homeless and affordable units.

The group, primarily funded by developer Crescent Heights and mall landlord Westfield, told a troop of cameras that the ballot initiative would thwart efforts to build the housing because 11 of those 12 sites would require zoning amendments, and if the so-called “anti-megadevelopment” measure passes, the projects would be subject to a two-year moratorium.

“The backers of this housing ban are trying to fool the public into thinking they are only going after a few quote-on-quote ‘mega-developments,’” Gary Toebben, president of the L.A. Area Chamber of Commerce, said at the news conference. “Despite its so-called ‘affordable housing exemption,’ this moratorium would make it impossible to build 100 percent affordable housing on 11 out of 12 city opportunity sites.”

Mayor Eric Garcetti and the City Council issued a call for proposals this summer for developers to convert the 12 city-owned sites in question into housing for homeless and low-income residents. In addition to the Lincoln Heights parking lot, the sites also include five vacant fire stations in Westchester and San Pedro and a former animal shelter on the Westside. So far, officials have received 73 proposals, Miguel Santana, an L.A. city administrative officer, told the L.A. Times.

Local labor unions have also joined the opposition efforts.

“Unite HERE doesn’t often see eye to eye with the Chamber of Commerce,” said Rachel Torres, an analyst at Unite HERE Local 11, a hotel workers union. “But we agree that our city needs to unite to defeat this housing ban. This is anti-worker, anti-renter policy. We need development reform that drives down rents and helps end homelessness.”

The Neighborhood Integrity Initiative will appear on the March ballot. Its campaign manager, Jill Stewart, told the Times the measure would still permit homeless housing in zones already designated as residential or commercial. [LABJ] [LAT] — Cathaleen Chen 

Riza Aziz and the Beverly Hills pad

From the New York site: Singapore prosecutors on Monday charged two bankers for helping misappropriate billions in from Malaysian state development fund 1MDB. The bankers, Yak Yew Chee and Yvonne Seah, are accused of forgery and failing to report suspicious transactions.

U.S. prosecutors are currently investigating Malaysian prime Najib Razak and his associates, including financier Jho Low, on suspicions that they used the fund to funnel billions in public money into their own pockets. ow allegedly used 1MDB funds to buy an 85 percent stake in the Park Lane Hotel in New York alongside developer Steve Witkoff. Earlier this year, the U.S. government seized his stake, effectively freezing plans to build a condo tower on the site until Low’s stake is auctioned off.

1MDB funds were also allegedly used by Riza Aziz, a film producer and the stepson of Malaysian leader Najib Razak, to buy a 11,000-square-foot walled Beverly Hills mansion at 912 Hillcrest Road.

Yvonne Seah worked as a private banker at Swiss bank SBI, where 1MDB had accounts. Yak Yew Chee was the relationship manager for those accounts, the Wall Street Journal reported. If found guilty of forgery, the two could face prison sentences of up to four years.

According to the Journal, Yak earned fame within the bank for his ability to bring in large clients. He earned $27 million in salary and bonuses between 2011 and 2014.

In its October issue, The Real Deal examined how dirty money is funneled into U.S. commercial real estate projects. [WSJ] — Konrad Putzier