Major Fashion District Buildings for Sale
Two buildings within the Los Angeles Fashion District—the California Market Center and the Gerry Building—could soon change hands.
The three-party group that owns the CMC reportedly has been negotiating a sale of the 3 million–square–foot complex, which is made up of three 13-story buildings and is filled with more than 1,000 manufacturers’ showrooms. Meanwhile, Gerry Building representatives acknowledged that the 9-story art deco building at 910 S. Los Angeles St. has been put on the block by owner MJW Investments Inc.
The Oct. 13 edition of Real Estate Alert, a bulletin distributed to the institutional investment community, reported that CMC owner Hertz Investment Group, headed by Judah Hertz; the Levy family of France; and Londonbased DMG World Media had reached an agreement to sell the center to Los Angeles real estate company Jamison Partners for $135 million.
When asked about the report, CMC General Manager Paul Lentz said: “The California Market Center has not been sold. That’s the story. That’s the fact.”
CMC tenants were unaware. Hal Kaltman of Hal Kaltman Textiles, who chairs a tenant/ landlord board of directors in the CMC, said he and other tenants had heard rumors about a sale but had not received any type of confirmation from the center’s management.
Jamison principal Dr. David Lee acknowledged in published reports that he was negotiating for the property but also did not confirm a sale.
The CMC—which contains apparel, gift and home accessory showrooms—does not particularly match the main business of Jamison Properties, which owns about 60 office and medical buildings in Los Angeles County. The privately held company does acquisitions, management and leasing.
The CMC last changed hands when the Hertz Investment Group purchased the center for about $85 million four years ago. Hertz sold DMG a 20 percent stake in 2003, when a portion of the center was transformed into a multiple-category wholesale showcase with new gift and home accessory showrooms. The transformation did not go quite as expected; a number of gift tenants who had relocated from the nearby L.A. Mart moved back, and several apparel resources migrated to the competing Gerry Building.
With the CMC’s occupancy currently at an estimated 60 percent and major investments having been made in the center, an offer of $135 million could be worth a sale, said real estate executives.
Across the street, Larry Hudson, director of asset management for Gerry Building owner MJW Investments, headed by Mark Weinstein, confirmed longtime rumors that the 57-year-old building is on the market and the original “play” was to sell it to a developer interested in turning it into condos. The building is about 65 percent leased, Hudson said.
“Yes, it is for sale,” Hudson said. “We do have signed leases going to 2009, so several issues will need to be addressed by anyone considering utilizing this beautiful fashion building for another use. Certainly taking into consideration the current market conditions for lofts and apartments in downtown Los Angeles would be a key factor in the decisions made about any conversion. Absorption over the next 12 to 24 months will be important for what is in store for the residential market in this area. Finally, it will be important for any buyer that chooses to keep this building as a fashion building to have an understanding of the fashion industry.”
Gerry tenants were not worried. “I don’t see it happening soon. I love this building. We all love it here,” said Lois Evans, who sells intimate apparel out of the showroom that bears her name. Evans was among the first to move in when the former manufacturing building was renovated and reopened in 2002.
CB Richard Ellis broker Mark Tarczynski said the current asking price for the Gerry Building is $18.5 million. The building was purchased as part of a 10-building package about three years ago. MJW’s Santee Court residential project was also part of that deal.
Tarczynski said the Gerry Building could be more viable than many think. He has already received some offers.
“It’s a gorgeous building, one of my favorites,” he said. “It’s got a good cap rate and is almost fully leased. Somebody may want to buy it as a showroom building or a conversion.”—Robert McAllister
