California Apparel News

At the intersection of Ninth and Los Angeles streets in downtown Los Angeles, competition among showroom buildings is fierce—but friendly.

The four major players—the California Market Center, The New Mart, the Gerry Building and the Cooper Building—have joined forces to promote the area as The Intersection. The group recently put down a brick-pattern crosswalk linking the four corners of the Fashion District junction.

While the buildings’ landlords are competitive with each other, they have recently collaborated to market the area to buyers, some of whom have strayed to importers along a new stretch of wholesale space a few blocks away off San Pedro and Crocker streets.

In October, the CMC’s vice president of marketing, Lorelyn Eaves, represented all the buildings at the Designers & Agents show in Japan to promote The Intersection to buyers, press and trade groups.

When it comes to signing tenants, the buildings are not as collaborative. As The New Mart has remained fully occupied, competing ventures have brought more space to the market during the past year.

The New Mart, home to about 100 contemporary showrooms, has been at full occupancy for about three years.

In the rare event that an existing tenant leaves, others in the building often jump at the chance to expand. One major tenant recently vacated about 90 percent of its space only to have it picked up by existing tenants, said Ethan Eller, general manager of The New Mart.

Rather than wait and wait for space to open up at The New Mart, showroom owners have been looking at the alternatives.

Among their choices is the Cooper Building on the east side of Los Angeles Street. Last June, management opened up the building’s second floor to a showroom space now known as the Cooper Design Space. Upand- coming contemporary labels, including 12th Street by Cynthia Vincent and Lotta, have already leased 50 percent of the 32,000- square-foot floor.

The rate of absorption has met building owner Steve Hirsh’s expectations. Hirsh said he will open additional showroom space in the Cooper Building if the second floor reaches maximum occupancy soon.

The existing tenants have been happy, said Leasing Director Mona Sangkala.

“They like the idea of being somewhere new,” said Sangkala. “Plus, they like being in a building where there are so many designers. There’s always some type of buzz going around here.”

The Cooper Building leases showrooms, starting at about 800 square feet, at rates that Sangkala said are competitive. Most buildings in the area lease showroom space for $1.25 to $2 per square foot.

Despite an inconsistent economy, most of the landlords in the area have fared well. Sangkala said five more leases should be signed at the Cooper Design Space in the upcoming weeks.

The nine-story Gerry Building, which opened in the fall of 2002, is now about half full. The number of leases signed is slightly lower than what Los Angeles–based property owner MJW Investments originally projected, however, said MJW Leasing Director Larry Hudson.

That has not deterred some significant tenants from grabbing space in the art deco building. The Nesi Apparel Group, which has the license for rapper Eminem’s new clothing line, Shady Ltd., signed a lease and is taking three rooms in the building. Tag Rag also opened a space in the building.

Hudson also signed leases with BP Inc., Adia Kibur and the Select Agency. BP sells up-and-coming urban/athletic brands Meoshe, Pass Tha Roc, Burgundy, BP and NBAstar Dominique Wilkins’ line, Give and Go. Select sells contemporary lines Reebok Diamond, Made U Look, Soul Rebel, Knot and Gorilla Union. Adia Kibur sells contemporary jewelry and accessories.

The Gerry Building is currently leasing showroom space on its seventh floor. Cleanup of the eighth floor should be completed by the end of the year, and construction on the ninth floor should be completed during the first quarter of 2004, said Hudson.

While MJW has signed some significant leases, Hudson said the building would benefit from more high-profile tenants. “We need more lines that buyers have to see,” he stressed.

The Gerry’s showrooms, which start at 1,131 square feet, lease for $1.35 to $1.55 per square foot.

“The showrooms here look like real showrooms,” said BP’s Kenyatta Sands of his glasscase area with large windows. “Everyone’s professional here.”

The CMC has fared well despite losing some tenants to competing facilities. General Manager Paul Lentz said the trio of connected buildings experienced “a dramatic rise in attendance” in 2003, but he did not specify exact figures. “It ultimately results in a strong leasing program for 2004 and beyond,” he said.

Lentz noted that several showrooms have expanded in recent months. “We are constantly enhancing our tenant base, while reserving room for our growing trade-show division and continuing with a capital improvement plan to upgrade this vital facility,” he said.

In the CMC’s C wing, dedicated to the gift and home furnishings industries, some companies have signed new leases, but others have left the building. Giftware showroom Fitz and Floyd moved out of its 5,000-squarefoot showroom at the CMC to return to the competing L.A. Mart about one mile away, where the company is leasing a 1,000-squarefoot showroom.

“The California Market Center is a great facility, but the traffic has not been adequate,” said Fitz and Floyd Director of Marketing Jim Shade. “Had it not been for the Sept. 11 disaster, it probably would have become the new gift mart.”

As Fitz and Floyd heads out, others are moving into the CMC. Russ Berrie and Co. Inc., a leading maker of plush toys and other gift items, will anchor the long-awaited seventhfloor redesign in time for the Jan. 13–20 run of the Los Angeles Gift & Home Market. Russ is taking a 14,000-plus-square-foot showroom. In addition, party-goods resource Amscan Inc. signed a lease to take an 11th-floor 6,500- square-foot showroom that includes the space that Fitz and Floyd had occupied.

Despite the pace of showroom growth in Los Angeles, some landlords don’t expect expansion to continue much further.

“The fact is there’s more profit right now in residential property [per square foot], so you’re probably not going to see a lot of immediate new showroom space beyond what we have,” said MJW’s Hudson.