A just-completed apartment complex on the Sunset Strip in West Hollywood has been sold to a Pennsylvania developer that plans to convert the property into a luxury extended-stay hotel.
The 190 apartments at 8500 Sunset Blvd. are part of a more than $300-million development covering two blocks on the Strip that is expected to also include a separate trendy hotel called "1," along with stores and restaurants.
Korman Communities, which operates the upmarket AKA line of extended-stay hotels, bought 8500 Sunset from Los Angeles developer CIM Group.
The Sunset Strip complex will be the second in the area for Korman, which already operates an 88-unit AKA on Crescent Drive in Beverly Hills that advertises room service from the legendary Spago restaurant among its amenities.
Rates have not yet been announced for the West Hollywood AKA but they start at around $4,500 a week at the Beverly Hills lodging.
Deluxe residential inns such as AKA are a small but growing niche in the increasingly fragmented hospitality business, said consultant Alan Reay of Atlas Hospitality Group. The current competition for AKA around Beverly Hills for upscale long-term stays is mostly rental homes or condominiums, he said.
The unoccupied residences at 8500 Sunset Blvd. purchased by Korman and partner Brookfield Property Group for an undisclosed price include eight multi-level units, 55 two-bedrooms, 118 one-bedrooms and 17 studios. The two-building, eight-story complex includes a swimming pool and a fitness center.
CIM Group retained ownership of the ground-floor retail portion of the complex, where Fred Segal has agreed to lease about half of the 42,000 square feet of available space. Fred Segal will house multiple boutique fashion retailers along with a cafe, fitness studio, wine shop and florist.
CIM Group bought the Sunset Boulevard parcels flanking La Cienega Boulevard in 2011 and announced that it would build a mixed-use project at the southeast and southwest corners. The residential portion was planned as condominiums, CIM co-founder Shaul Kuba said.
"The goal was always to sell," he said. "Our business plan has been completed."
CIM Group is expected to sell its hotel at the complex for about $280 million to hotel industry giant Starwood Capital, Reay said. CIM declined to comment on the pending sale.
Starwood is expected to operate the 286-room hotel at 8490 Sunset Blvd. under the name 1, an eco-conscious brand that Starwood touts as being assembled with reclaimed materials and careful with its energy use and waste.
At other 1 hotels, electronic room keys are made of recycled wood and every room comes with a yoga mat. The 1 hotel could open later this year.
The forthcoming AKA extended-stay lodging, hotel, stores and restaurants will enliven a key stretch of Sunset at La Cienega, Kuba said.
"That was the missing tooth between the Mondrian Hotel and Sunset Plaza," he said. "Now the sidewalk will be full of pedestrian activity."