California Apparel News

Getting a Class A showroom in the Los Angeles Fashion District is becoming a waiting game.

The upswing in contemporary and young designer fashion has created strong demand but has also put a cramp on wholesale real estate space in the city.

The primary venues are found in the “Intersection” at Ninth and Los Angeles streets. The New Mart is sold outand has a waiting list. The Cooper Design Space recently began renovating its 10th floor to house showrooms and has already leased 90 percent of the space on that floor, according to Mona Sangkala, the Cooper’s leasing director.

The California Market Center reacted with plans to revamp its fourth and fifth floors for a new contemporary showcase, but that won’t be ready until at least next spring.

Meanwhile, the Gerry Building is moving in the opposite direction, with a number of closures. Hermosa Beach, Calif.–based LaeRocPartners, which owns the art deco structure, recently expressed interest in selling the showrooms as wholesale condominiums rather than leasing them. The real estate company has raised rents as high as 25 percent for tenants whose leases were expiring, according to former tenant Lois Evans. The hikes have companies such as New Era Cap bidding farewell.

“We’ve been here for four years, but the [rent increase] is more than we can afford,” said showroom manager Fili Martinez, who operates the showroom as El Diablo’s Magics.

Evans, one of the first tenants in the building, left to open up a new lingerie showroom in a Westside loft.

“Considering I was the first tenant in the building and helped to bring lingerie reps to the building, as well as having expressed an interest in purchasing my showroom, they were not interested in negotiating the increase at all,” she said.

Another Gerry tenant, Stacia Diamond, is moving her Clarity Group showroom to the Cooper Design Space after less than a year in the Gerry Building.

“At this point there are so many tenants leaving, so how are they going to sell condominiums when there’s no one here?” she said.

LaeRoc representatives referred all inquiries regarding the building to the company’s Chief Executive Officer Kim Benjamin, who did not return numerous calls regarding these issues. LaeRoc is a real estate company that caters to pension-fund investors. It owns other buildings in downtown as well as hotels in Hawaii.

The departures and uncertain future have existing tenants wondering about the future of the Gerry Building.

“We’re getting a little nervous,” said Lucy Thompson of the Nikki & Lucy showroom. “It’s a great space and we’d hate to give it up.”

Thompson said her lease does not expire until next summer. Likewise, lingerie rep Jennie Nielson said the lease for her Ellusions showroom is good for another year, but she said no one from LaeRoc has approached her about buying her unit.

Several tenants said the management took a turn when former leasing director Larry Hudson left the company a couple of years ago.

“For the first few years we were very fortunate to have Larry Hudson at the helm, who was responsible for creating an exciting and prospering energy to the building, but much of that changed when he left,” Evans said.

However, LaeRoc recently sent tenants a memo explaining plans to renovate the rooftop and open it up for events. In the past it has hired agencies to lure fashion tenants to the building, but the building has never received the show traffic that its Intersection neighbors have.

CMC contemporary bid

Earlier this year, the building announced plans to expand its existing 130,000 square feet of contemporary space to add an additional 42,000-square-foot space called Area 4. The new fourth-floor space, which is slated to open in March, will have a stairway connecting it to the fifth floor, as well as specialized features such as a VIP elevator and a concierge desk for buyers.

Area 4 is the building’s largest renovation project since it opened the second wing of the 13th-floor Penthouse Pavilion in 2005. The CMC is also looking to expand its contemporary children’s offerings, which are currently housed on the sixth floor, which has been sold out since last year.

Meanwhile space exists within the CMC’s C building, which borders Olympic Boulevard. Five years ago, the building’s then owners began leasing C-building showrooms to gift tenants in an effort to create a major multidimensional marketplace with gift and home accessories products paired up with fashion goods. But after the group that hatched the plan sold the property to current owner Jamison Properties in 2004, the gift venue has lagged.

Many of the major C-building tenants relocated to the L.A. Mart, about a mile away, and most of the gift-sector floors have numerous vacancies. That has hurt whatever remaining tenants are left.

“We are not seeing any new business. We are relying on our loyal customers,” said Erin Madden of the Madden Corp., which imports Hawaiian goods.

Still, the CMC has made efforts to rebuild that side of the business and recently added three tenants to the gift area: The Drexler Group, Fem Sales and PTM Images.

A CMC representative said the management is still hosting regular gift-industry markets and is running marketing programs to promote the gift shows.