Group to Buy Downtown May Building : To Convert Structure Into Center for Home Furnishings Industry
A consortium of local real estate investors said Thursday that it is purchasing the historic building at Eighth and Hill streets that now houses the downtown May Co. store and will convert the landmark into a wholesale and showroom center for the home furnishings industry.
The investment group, headed by real estate developers Robert Blumin and Richard Barclay, believes that the new project--to be known as Palace Square--will provide a cheaper alternative to the Pacific Design Center, located in the heart of the city’s home furnishings center in West Hollywood.
May Co. will continue to operate on the first three floors while a massive, $150-million renovation begins on the upper floors of the nine-story, 1.2-million-square-foot building.
As previously announced, May Co. will relocate its downtown store into Citicorp Plaza--currently under construction at Seventh and Figueroa streets--in the spring or summer of 1986, according to Edgar S. Mangiafico, chairman of May Co. California.
Built in 1906
The May Co. building, which is listed on the National Register of Historical Buildings, was built in 1906 to house the A. Hamburger & Sons department store. It has housed May Co.’s downtown store since 1923.
Palace Square is a joint venture of Blumin’s and Barclay’s firm--Double R B Associates--and Palace Square Development Corp., composed of James Carleton, Richard Sheldon and Mary Mauldin Brown, all of whom have been active in the local interior design industry.
Blumin said in an interview after a Thursday press conference that the entire Palace Square project involves the land and two buildings located on the block between Eighth and Ninth streets on the north and south and Broadway and Hill on the east and west. The properties, which are still in escrow, were purchased from the Los Angeles Pan American Trade Center for about $50 million, according to Blumin.
Plans call for the complete renovation of the interior of the May Co. building to accommodate showrooms for the wholesale trade of the interior design and home furnishings industry. Rents are expected to run an average $13 to $15 a square foot annually, compared to the $24- to $36-per-square-foot annual rent at the Pacific Design Center, Blumin said.
Palace Square is to open in the summer of 1986 when many current leases at the Pacific Design Center are scheduled to expire, according to Sheldon, who says the main attraction of Palace Square will be its more “affordable style with lots of elegance.”
Murray Feldman, executive director of the 9-year-old Pacific Design Center, said he did not see Palace Square as a threat, adding that rents are about $24 a square foot annually but not the $36 per square foot that Blumin quoted.
Feldman would not discuss lease renewals. “Anybody who wants something cheaper can find it,” he said.
He added, however, that Pacific Design Center, which previously had planned to add a hotel and office complex to the 750,000-square-foot showroom facility, is now planning to add 800,000 square feet of new showroom space instead. At a total of 1.5 million square feet, it would be larger than Palace Square’s 1.2 million square feet.
“We are 100% occupied and the industry indicated to us an overwhelming need and demand for additional space within the PDC,” Feldman said.
Meanwhile, Palace Square is working on potential clients. Sheldon said the group has received a number of “good, strong letters of intent for about 250,000 square feet. We hope to convert that to leases.”
Blumin and Barclay have been active in the development of downtown properties surrounding the May Co. store. They built 800 Figueroa, a 12-story office building at that address, and are nearing completion of the International Tower, a 20-story office complex at Ninth Street and Figueroa.
The developers’ interest may stem in part from the fact that the federal government provides tax credits of 15% to 25% of the cost of restoring historic buildings. Palace Square has hired the San Francisco-based architectural firm of Kaplan/McLaughlin/Diaz for the renovation.
The Bay Area firm has renovated 28 historical places for commercial use, including the Gift Center in San Francisco, a former paper warehouse, and the International Market Square in Minneapolis, a former Munsingwear plant.
