Property Report

David Simon of Kilroy Realty stands at the site where the firm plans to build office buildings, apartments, shops and restaurants. (Francine Orr, Los Angeles Times / January 30, 2014)

With plans for a motion picture museum relocated to Wilshire Boulevard, another vast complex of apartments, offices and stores may be coming to the heart of Hollywood in the block just south of the ArcLight Cinema complex.

The Academy of Motion Pictures Arts and Sciences, the group that puts on the Oscars, scrapped plans for a museum there and sold the full city block near Sunset Boulevard and Vine Street to Los Angeles developer Kilroy Realty Corp. for $46 million.

The proposed project, valued at as much as $285 million, underscores the ascendancy of the Vine Street neighborhood around Hollywood and Sunset boulevards, where billions of dollars' worth of development has been completed or planned in recent years.

"Vine used to be considered the redheaded stepchild to Hollywood and Highland," real estate broker John Tronson of Avison Young said, "but the Vine Street corridor has surpassed Hollywood and Highland in terms of interest from buyers, interest from residents and interest from office tenants."

The Academy spent about $50 million in the mid-2000s buying the block just south of the ArcLight Cinema complex, which includes the landmark Cinerama Dome. The block is surrounded by Vine Street and De Longpre, Ivar and Homewood avenues.

Academy officials planned to build a museum dedicated to cinema history on the property, which is also next to the Pickford Center for Motion Picture Study on Vine Street. The academy hired French architect Christian de Portzamparc to design a museum, but it was unable to move forward on the ambitious project when it failed to raise roughly $350 million to $400 million in necessary funds.

In 2011 the Academy announced that instead it would open the museum in a former May Co. department store at Wilshire Boulevard and Fairfax Avenue that is owned by the Los Angeles County Museum of Art. The $300-million museum project is expected to involve substantial improvements and additions to the Art Deco-style building. Work is expected to begin this year and be completed in 2017.

In Hollywood, Kilroy Realty plans to seek city approval to develop a 475,000-square-foot mixed-use campus intended to serve small businesses in the entertainment industry. The complex, which doesn't have a name yet, is to incorporate three office buildings, 220 apartments and shops and restaurants along Vine.

Three existing buildings on the site, including a former Big Lots store and a 1920s warehouse, will be rented to tenants during the city approval process, which is expected to last about 18 months, said David Simon, executive vice president of Kilroy Realty.

The Academy, which has been holding public outdoor movie screenings on the property, will also lease space for special events until construction begins.

The buildings will be razed before construction begins, Simon said. The developers hope to create a self-contained environment for firms that need offices of 15,000 square feet or smaller.

"We want to create a sense of place," he said. "Creatives like to be with creatives."

Shimoda Design Group will design the project under the direction of House & Robertson Architects.

Hollywood is home to a growing number of young firms involved in such fields as film and television production and postproduction, Simon said. There are also newly formed ancillary businesses such as advertising and marketing firms.

"The growth in the economy in L.A. is coming out of media, entertainment, gaming and social networking," he said.

He is not dissuaded by persistent reports of film production fleeing Hollywood.

"They may go to New Orleans for a tax credit, but they do everything before and after filming in L.A.," he said. "We're in the heart of Hollywood surrounded by studios."

Kilroy Realty, which has developed office buildings in the West for decades, has recently committed to serving the entertainment industry.

With this acquisition, the company has about 1.2 million square feet under development in Hollywood. Kilroy Realty recently started work on its $390-million Columbia Square project mixed use campus on the former site of CBS Los Angeles' television and radio operations at 6121 Sunset Blvd.

Kilroy Realty is also working on a multimillion-dollar renovation of Sunset Media Center, a 22-story office complex at 6255 Sunset Blvd. Construction is expected to be finished by March.

Hollywood is in a dynamic phase of development, broker Tronson said, and the blocks along Vine are emerging as a particular hot spot.

"That's where the locals are," said Tronson, who helped arrange the deal between Kilroy and the Academy. "There are lot of cool restaurants and community retail, and you don't have to deal with tourists or traffic."

roger.vincent@latimes.com

Twitter: @rogervincent