Gerry Building Finds a Buyer
An unnamed fashion industry executive has reached an agreement to purchase the historic Gerry Building in the Los Angeles Fashion District for close to its asking price of $15 million.
In 2002, Los Angeles real estate developer MJW Investments refurbished the 110,000- square-foot building, turning it from a manufacturing space into wholesale showroom space for the apparel industry. MJW confirmed last month that it had put the art deco building on the market.
Broker CB Richard Ellis (CBRE) and MJW officials confirmed the sale and said escrow should close in February. Both parties declined to name the buyer, but they confirmed that the party is close to the fashion industry.
“Everything suggests that the building will remain as showrooms,” said Mark Tarczynski, a vice president with CBRE in Los Angeles, which handled the listing for MJW.
That sat well with Gerry tenants, who had been hearing rumors that the building would be converted into condominiums.
“I really wasn’t that concerned,” said innerwear wholesaler Lois Evans, one of the first tenants in the building. “All of the buildings around here have changed hands a few times over the past 20 years. The one thing I am concerned about is a change in management. Larry Hudson [MJW’s director of asset management] has been great for this building. He has made it unique, and he’s one of the reasons why I came over here.”
The Gerry is in a strong position. Its 64 units are about 90 percent occupied, according to CBRE. The building has lured a number of national apparel brands, including rapper Eminem’s line Shady Ltd., Levi Strauss & Co., Polo denim, Rocawear and It Jeans.
The transaction comes on the heels of the pending sale of the neighboring California Market Center, which houses more than 1,000 apparel, gift and home accessories showrooms. Los Angeles–based Jamison Properties is paying about $135 million for the CMC, and escrow is expected to close during the first quarter of 2005.
The Gerry transaction still has a way to go, said Hudson, noting that the proposed buyer’s financing has to go from the softmoney to hard-money stage. The Gerry was part of an $18 million, 10-building deal MJW closed two years ago with the Gerry family. MJW spent approximately $4.5 million on the renovation. The building currently generates about $1 million a year in rent.
A change in ownership and management may bring new looks to The Intersection, a promotional campaign of the Gerry, the CMC, the Cooper Design Space and The New Mart aimed at improving the marketability of the Los Angeles Fashion District. All the buildings are based at the intersection of Los Angeles and Ninth streets.
The transaction also adds to the flurry of real estate activity in Los Angeles, which has attracted a number of institutional investors.
MJW is also selling portions of its 780,000-square-foot mixed-use center, Santee Court, which includes loft apartments, condominiums and retail space. —Robert McAllister
