Apartment occupancy stable, rents on rise

The nation’s apartment vacancy rate is expected to be 5.5% at the end of the year and hold at that rate through 2012, a real estate brokerage said.

“Apartment demand is benefiting from slight job growth as well as an expanding pool of potential renters,” said Gleb Nechayev, a senior economist for CBRE Group Inc.

Vacancy is down slightly from a year ago and off nearly 2 percentage points from the 2009 peak, the brokerage report said.

Conditions are generally good for landlords but vary from market to market with rents flat or down slightly in some and rising by almost 15% from a year ago in others, Nechayev said.

Over the next two years, metropolitan areas such as San Francisco, San Jose, Austin, Denver and Seattle are expected to see the highest rent growth.

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Apartments under construction at Wilshire and Barrington

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-- Roger Vincent

Photo: The Harvey Apartments in Hollywood.   Credit: R. Daniel Foster

Long Beach World Trade Center sale stalled

Plans by the Port of Long Beach to buy the Long Beach World Trade Center office complex have stalled.

The due diligence period of the planned transaction expired last week without the Board of Harbor Commissioners agreeing to complete the $130-million deal, effectively killing it.

Commissioners earlier split 2 to 2 on a vote with President Susan Wise abstaining because she and her husband lease space in the Ocean Boulevard tower.

The owners of the trade center, Legacy Partners, asked the state’s Fair Political Practices Commission to rule on whether Wise’s recusal must stand and are waiting for a decision.

“If she is allowed to vote and she votes no, we’re big boys and will move on,” said Greg Hall, a managing director at Legacy. “We just wanted to see a fair vote.”

Legacy is not marketing the 575,000-square-foot building to other potential buyers, he said.

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Port of Long Beach to acquire Long Beach World Trade Center

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--Roger Vincent

Photo: Long Beach World Trade Center. Credit: Legacy Partners

Apartments under construction at Wilshire and Barrington

Construction of a six-story apartment building got underway last week at Wilshire Boulevard and Barrington Avenue in West Los Angeles, one of the area’s major intersections.

The property, formerly anchored by a liquor store and shoe store, was one of the most underutilized sites in West Los Angeles, said Ken Kahan, president of California Landmark, the Los Angeles company building the $35-million complex.

The apartment building called the bw replaces the previous plan for the site, a 28-story condominium building approved in 2004. Condo values and sales fell in the economic downturn, however.

“A high-rise condominium tower does not work in today’s market,” Kahan said.

Set to open in August 2013, the bw will have 78 units expected to rent for $2,200 to $4,000 a month. The design by Los Angeles-based PK Architecture calls for a rooftop garden, modernist lobby and a gym.

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-- Roger Vincent 

Image: The planned bw apartment complex at Wilshire and Barrington. Credit: California Landmark

United Talent Agency leases former Hilton Hotels headquarters

United Talent Agency has agreed to move its headquarters into the former Hilton Hotels headquarters near Beverly Hills City Hall in one of the region’s biggest office leases this year.

The talent agency, one of the world’s largest, signed a long-term agreement to rent 120,000 square feet. New York developer and landlord Tishman Speyer acquired the former Hilton buildings at 9336 and 9346 Civic Center Drive in January and launched a $30-million makeover of the complex built in the 1980s to make it appeal to prosperous tenants.

United Talent will begin its own multimillion-dollar improvements to its space early next year and move 350 employees there by late 2012, the agency said.  Plans by architectural and design firm Rottet Studio include a 150-seat screening room and other amenities.

The complex will be renamed UTA Plaza.

Magazine publisher Playboy Enterprises Inc. announced last week that it will also move into 45,000 square feet in the former Hilton headquarters, which is now nearly fully leased, Tishman Speyer said. Terms of the leases were not disclosed, but the landlord is asking for about $4 per square foot per month for space in the complex, according to real estate data provider CoStar Group.

The talent agency now occupies 80,000 square feet in Wilshire Rodeo Plaza at 9560 Wilshire Blvd., the former headquarters of investment bank Drexel Burnham Lambert.

“After 20 great years on Wilshire we are excited to have a new campus that will allow for our continued growth and provide an enhanced environment for our colleagues and clients,” the agency’s board of directors said in a joint statement.

The agency also has an office in New York.

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WeWork to open shared offices for entrepreneurs in Hollywood

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-- Roger Vincent 

Image: Rendering of UTA Plaza after a planned makeover. Credit: Tishman Speyer

 

WeWork to open shared offices for entrepreneurs in Hollywood

 

WeWork, a shared-office service for budding entrepreneurs, has agreed to open its first Southern California outpost, in Hollywood.

The New York company leased 35,681 square feet, almost half the space in the former Stephen J. Cannell building at 7083 Hollywood Blvd., in a deal valued at $15 million.

WeWork plans to open offices for 350 to 400 entrepreneurs and small-business freelancers by mid-February, co-founder Adam Neumann said. Tenants will be screened by WeWork to ensure a wide range of business specialties. They will be encouraged to do business with one another.

“What we are creating is a networking community,” Neumann said. “We are the world’s first physical social network.”

The Los Angeles office will be WeWork’s sixth, joining a recently opened outpost in San Francisco and four in New York. The offices are an updated version of executive suites, Neumann said, in which tenants share workstations and such amenities as kitchens, conference rooms, coffee bars, private phone booths, a meditation room and an Xbox gaming lounge.

Building managers observe tenants’ business skills and make introductions and recommendations for work with other tenants, he said.

“If you are a member of the WeWork community, we can get your lawyer, accounting services, PR, IT person and brander all for less than $10,000,” Neumann said.

In other cities, WeWork offices are in historic-looking buildings that predate World War II. The Los Angeles offices will be in a six-story mirrored glass structure near La Brea Avenue that was completed in 1985 and is owned by CIM Group, Hollywood’s largest commercial landlord.

“Los Angeles was a little bit of an enigma,” Neumann said. “It’s not easy to understand where the right location is, not like New York,” where offices are in fashionable neighborhoods, including SoHo and the Meatpacking district.

Hollywood, he decided, is up and coming and had the added blessing of his wife, actress Rebekah Paltrow. The cousin of Gwyneth Paltrow “lived in Los Angeles for a few years, and from her experience this was the right place,” he said.

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-- Roger Vincent

Photo: Inside a WeWork shared office in New York. Credit: WeWork

 

 

La Costa Resort's $50-million renovation complete

La Costa Resort & Spa on Monday will unveil the results of a $50-million makeover intended to update the family-oriented resort and make it more appealing to adults.

The Carlsbad inn competes with several newer resorts in north San Diego County and south Orange County and was due to be renovated, industry experts said.

The makeover taking place over the last 18 months freshened 474 guest rooms, updated meeting rooms with new technology and added amenities to the spa. The resort also got a new swimming pool and whirlpool bath area overlooking the golf course that is strictly for adults.

La Costa had a $40-million makeover in 2003 but it was time for another, said consultant Alan Reay of Atlas Hospitality, who is not involved with La Costa. He recommends that hotels set aside enough income to conduct serious renovations every five to eight years.

“In order be competitive, you have to keep putting money back into a hotel,” he said. “It’s very important if you want to maintain your group business and meeting business that you keep the property up.”

About 55% of La Costa’s guests come to attend a business function, general manager Paul McCormick said. The rest are leisure travelers.

The large resort –- it includes 611 rooms, suites and villas on 400 acres -– has evolved over decades. Soon after it opened in 1965, ads in The Times suggested that children ride horseback while Dad golfed and Mom played tennis or relaxed by the pool. The resort still focuses on family activities, with a kids club, game lounge and daunting water slides at the main pool to keep youngsters entertained.

“It’s now a wonderful campus environment,” McCormick said, but it was time to spruce up some of the adult components. The golf course was improved, he said, and a sports bar was added. “The real focus has been how do we bring sexy back to La Costa.”

Other hotels are likely to follow La Costa’s lead as the hotel industry gets back on its feet after rough years during and after the recession, consultant Reay said.

“There is a tremendous amount of inventory that has not been upgraded” since the economic downturn began, he said. “You are going to see a whole wave of hotels renovating over the next two or three years.”

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-- Roger Vincent

Photo: A plaza at La Costa.  Credit: La Costa Resort & Spa 

Commercial property prices stay flat in October

 

Commercial real estate values have risen substantially since the trough of 2009 but remained flat in October, an industry analyst said.

Properties such as office buildings, warehouses, apartment complexes and malls have increased in value by more than 45% from the bottom of the market in 2009, according to Newport Beach-based Green Street Advisors Inc. That means that three-quarters of the decline in values that occurred as the market went down between 2007 and 2009 has been erased.

Prices are back to where they were in late 2006, about 10% below their all-time highs.

“After enjoying a robust two-year recovery, property prices have effectively gone into a stall over the last six months,” said Mike Kirby, director of research at Green Street. “Some of the factors that have been fueling the impressive recovery in values have taken a turn for the worse, including the economic outlook and capital availability.”

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-- Roger Vincent

Photo:  Commercial buildings in Kansas City. Credit: Kansas City Convention & Visitors Assn.

Trammell Crow buys Los Angeles River development site

Developer Trammell Crow Co. has agreed to buy a once-controversial site along the Los Angeles River near downtown Los Angeles with the intention of turning it into a manufacturing center for technology businesses.

Trammell Crow said it would pay $15.4 million to the Los Angeles Community Redevelopment Agency for 20 acres of land at Santa Fe Avenue and Washington Boulevard. The deal is contingent on a decision from the state Supreme Court expected by January on budget legislation that sharply limited the agency’s functions.

The Cleantech Manufacturing Center project would create 300,000 square feet of industrial and office space to house about 200 workers and would be the southern anchor of a planned technology corridor along the river, said David Bloom of the CRA.

The top 30 feet of soil at the site has been cleared of contaminants left by generations of industrial use involving train maintenance and bus manufacturing, said Brad Cox, a senior managing director at Trammell Crow. Work could begin by the end of 2012 while further pollution abatement continued, he said.

“There are just not a lot of large parcels available in the downtown-adjacent area, and this is a chance for us to deliver a state-of-the-art product to attract clean-tech tenants,” Cox said.

Earlier plans to reuse the site decades ago included a prison and a toxic waste incinerator, but neighborhood opposition thwarted those proposals.

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Photo: Redevelopment official Cecilia Estalano, left, and city planner Claire J. Bowin look over the clean technology corridor plan on the Los Angeles River in 2009. Credit: Lawrence K. Ho / Los Angeles Times

CBRE completes purchase of ING's real estate investment business

CBRE Group Inc. on Monday completed a $900-million acquisition of ING Group's real estate investment management arm in Europe that makes the Los Angeles company the global leader in that business.

The ING real estate investment operations in Europe are being merged with CBRE Group’s existing real estate management business. The combined entity -- including Netherlands-based ING’s similar business in Asia that was acquired by CBRE on Oct. 3 -- will operate as CBRE Global Investors, headquartered in Los Angeles.

Investment managers raise money from pension funds, universities and other institutional investors and buy commercial real estate such as offices, warehouses and shopping centers on their behalf. The properties produce income for their owners through rents and could be sold at a profit.

In addition, investment managers collect fees for creating and managing the real estate portfolios for their clients. Analysts consider the asset management business less volatile than the transaction brokering business, which rises and falls with sales and leasing activity in the market.

With the ING acquisition, “we have completed the most transformative transaction in our industry since the purchase of Trammell Crow Co. in 2006,” said Brett White, chief executive of CBRE. “Our expanded investment management business will enhance our service offerings for institutional investors in commercial real estate, and provide us with another source of stable revenues.”

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Sales of Los Angeles hotels are brisk

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--Roger Vincent

Sales of Los Angeles hotels are brisk

With the hospitality business in recovery and some financially troubled properties coming to market, sales of hotels in Los Angeles County have increased dramatically in 2011, a real estate brokerage said.

Investors have spent $550 million so far this year on such properties as the Kyoto Grand Hotel and Gardens in downtown Los Angeles and the Sheraton Universal Hotel Los Angeles in Universal City, a 77% increase from the same 10-month period in 2010, real estate brokerage Jones Lang LaSalle said in a report.

Los Angeles is one of the largest tourism markets in the country and second to New York as the top-ranked destination for overseas visitors, the report said. Historically, Los Angeles’ most well-known attractions have been Hollywood studios, Santa Monica beaches and Beverly Hills shopping. However, downtown Los Angeles has come into its own following a decadelong renaissance.

“The revitalization of the downtown Los Angeles market, along with an increased volume of international and overnight visitors continues to be a key driver for the economy,” said John Strauss, a managing director at Jones Lang.

Downtown Los Angeles is seeing a flood of foreign and domestic investment in major development projects. Korean Air plans to demolish the 896-room Wilshire Grand Hotel north of Staples Center and replace it with a $1-billion mixed-use complex with office, retail and residential components, along with a luxury hotel. The existing hotel is slated to close at the end of the year.

Also planned downtown near L.A. Live is a 22-story hotel to be operated as both a Residence Inn by Marriott and a Courtyard by Marriott starting in 2014. Other hotel brands and developers are shopping for sites to build new inns, real estate brokers said.

Los Angeles is projected to host more overnight visitors this year than it has in a decade — an increase bolstered by strong international tourism specifically from Australia, Britain and Japan. International visitors represent one-fifth of the city’s tourist arrivals and generate more than one-third of tourist spending. The number of foreign visitors last year increased 18%, providing a boost to the Los Angeles hotel market.

Revenue produced by L.A. County hotel rooms is expected to continue to increase next year, the report said, but sales probably will be down because the number of properties available for purchase will diminish.

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-- Roger Vincent

Photo: L.A. Live in downtown Los Angeles. Credit: US Presswire

Luxury student housing complex near USC sold to investors

A new luxury student housing complex outside of USC called West 27th Place was purchased by New York investment manager Kayne Anderson Real Estate Advisors.

The seven-story, 161-unit complex at Figueroa and 27th streets is decidedly up-market, with such amenities as a 24-hour fitness center, billiards, a hot tub, barbecues and a resort-style pool with a sun deck and cabanas. Ground floor businesses will include restaurants.

Selling the complex, which opened this fall, was a joint venture of Los Angeles developers CityView and Symphony Development, real estate brokerage Institutional Property Advisors said. The price was not disclosed but downtown property experts predicted it would sell for about $60 million.

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-- Roger Vincent

Photo: West 27th Place. Credit: CityView