Luxury apartment, retail development to get underway in L.A.
Few major commercial real estate projects have launched in Southern California since 2008, when the economic downturn crashed the party.
That may be about to change.
Mall magnate Rick Caruso is set to break ground Tuesday on a $60-million luxury apartment and retail development near his Grove shopping center in Los Angeles.
FOR THE RECORD:
Luxury development: An article in the March 8 Business section about a housing and retail project planned by Rick Caruso on Burton Way at La Cienega Boulevard included a map that had two streets labeled as Beverly Boulevard. The street a few blocks south of Beverly Center that was incorrectly labeled Beverly Boulevard is actually Wilshire Boulevard. —
The eight-story complex will house 88 apartments over a Trader Joe’s grocery store on a site on Burton Way at La Cienega Boulevard that was once home to a popular seafood restaurant known for its entrance in the shape of a whale’s mouth.
The project will be smaller than the Grove or Caruso’s vast Americana at Brand shopping and residential development in downtown Glendale, but it is one of a handful of substantial developments that have gotten underway since the downturn brought most building to a halt.
Economic recoveries typically feed on new residential and commercial projects, which prompt the hiring of construction workers and spending on such necessities as lumber, concrete and furnishings. Economists say the current recovery has supported little construction so far.
But the timing is right to start an apartment and retail complex, Caruso said. Construction costs are down from their peak a few years ago and financing was available because the apartment market is tightening. By the time the complex is completed in fall 2012, he said, “we are confident the market will be even stronger.”
Caruso said he was emboldened by the popularity of apartments his company, Caruso Affiliated, owns at Americana at Brand in Glendale. The 238 units there have been nearly fully leased in recent months at rents 30% above the local average, he said.
Caruso calculates that his latest venture’s apartments will appeal to affluent young professionals, such as people in the entertainment industry or doctors at nearby Cedars-Sinai hospital. Rents will run about $3,500 to $7,000 a month, he said.
The project — called 8500 for its address at 8500 Burton Way — will rise on a parking lot that was once home to the Smith Bros. Fish Shanty, an upscale seafood eatery that helped anchor La Cienega’s restaurant row.
Los Angeles television writer Mark Evanier, a devotee of the city’s long-gone classic restaurants, remembers the eatery fondly, in part for its abalone and warm potato salad.
“You entered through the whale’s mouth. It had kind of a clubhouse feeling, with big red booths you could sink into,” Evanier said. “It was the kind of place men ate.”
The Fish Shanty was heavily damaged by a fire in 1989, about a year after it closed. Caruso acquired the property a few years after the 1992 completion of a Loehmann’s-anchored shopping center just up the street. It was his first real estate development.
A real estate investor familiar with the neighborhood said the moment was here to begin development on some prime urban locations such as Caruso’s property near the SLS Hotel and Beverly Center.
“It’s probably a good time to put a shovel in the ground on some key sites,” said Drew Planting of Goldstein Planting Investments. In January, his firm acquired the well-known Palm restaurant and a Rolls-Royce dealership on Santa Monica Boulevard in West Hollywood.
“Rick has an ability to tap into the Los Angeles consumer’s zeitgeist,” Planting said. “If he builds the right product, it will move.”
