Just off Melrose Avenue at La Cienega Boulevard in Los Angeles is tree-lined Melrose Place — a quiet stretch of shops and boutiques near West Hollywood that includes some of the world's best-known fashion brands: Oscar de la Renta,
Now, a New York developer has bought a cluster of exclusive shops along the strip that has become one of L.A.'s most chic, high-rent retail addresses. And the complex is already drawing a VIP list of tenants including a new flagship store for the
FOR THE RECORD:
Melrose Place: In the Oct. 24 Business section, an article about a New York developer's purchase of some Melrose Place shops misspelled one of the well-known fashion brands on the street, Bottega Veneta, as Bottega Venata.
While developer Zach Vella was negotiating the recent purchase valued at about $30 million, former child stars turned fashion designers Mary-Kate Olsen and
When the Olsens open their store in March, their neighbors will include French fashion house Chloe. Also in the complex is a salon for Violet Grey, a beauty line recently launched by Cassandra Grey, wife of Paramount Chief Executive Brad Grey.
"These are brands that have a lot of energy right now," Vella said.
The investment is the first outside New York for Vella's company VE Equities, which has developed several luxury condominium buildings in
"We have several hundred million [dollars] to invest and we are looking at the best locations to invest in," he said. VE Equities is looking primarily at high-end retail properties and office buildings.
"We really like the Sunset Strip area," Vella said.
Los Angeles, which has a less heated real estate market than New York's, currently offers investors a better financial return than the Big Apple does, he said. "We're just seeing a lot better opportunities here."
Vella's strategy is to zero in on choice properties and spend what it takes to get them. VE Equities paid a private limited liability company about $2,000 per square foot for the Melrose Place buildings, far above the per-foot cost of a downtown Los Angeles skyscraper and approaching upper-tier prices in Beverly Hills.
"Melrose Place is the second-most sought-after market after Rodeo Drive," said Beverly Hills real estate broker James Harris of Partners Trust. Harris and his partner David Parnes represent Vella in Los Angeles, he said, and helped Vella buy the Melrose Place buildings before they were on the market.
Although two television dramas have been based on a fictional "Melrose Place" apartment building, the real street is a bit of a retail oddity for Los Angeles: a calm, quaint stretch of ivy-covered shops in the middle of the bustling city.
Several prestige fashion brands find that appealing, brokers said, because Melrose Place has cachet without the touristy flamboyance of Rodeo Drive or the nonstop action of paparazzi magnet Robertson Boulevard.
The emergence of Melrose Place as a fashion hot spot is fairly recent, however. It's had residences and a church and was home to a small live theater in the 1970s. In the following decades the three-block street became known as a destination for top-shelf stores selling antiques and home furnishings. After starting with an overflow of dealers from La Cienega Boulevard, Melrose Place became a district of its own.
By most accounts, another transformation began in the mid 2000s when Marc Jacobs and Marni moved onto the block in quick order. They were followed by other upscale retailers able to keep up with rising rents. Many of the brands on Melrose Place are sold in department stores but have few branches of their own.
The street took a hit as tenants lost business in the recent financial downturn, but it has recovered quickly as luxury brands led the retail industry's comeback, consultant Peter Lynch said. Melrose Place is in the sweet spot for international fashion firms.
"Those bigger, better brands who want to make a statement on the West Coast find that is a good place to do it," said Lynch, a principal at A&G Realty Partners. "It is far enough away from department stores, it doesn't have a Rodeo Drive feel, and it's cool."
Rents on Rodeo are also substantially higher at up to $600 per square foot per year, said real estate broker Chuck Dembo of Dembo Realty.
Melrose Place seems like more of a bargain at $96 to $120 per square foot, but that's more than double the price of rent on the well-known nearby shopping blocks of Melrose Avenue east of Fairfax Avenue.
"Melrose attracts a bit younger customer," Dembo said, and lower-profile stores.
Big-name fashion businesses like
"Tommy Hilfiger," Dembo said, "would never have gone to Melrose Place."