Grocery-Office Site Planned for Beverly Hills

Spurred by slim office vacancy rates in Beverly Hills’ famed Golden Triangle area, Los Angeles developer J.H. Snyder Co. has filed plans with the city to develop a $60-million office building and grocery store--one of the first such projects planned for the tony area in years.

Snyder has signed a 75-year lease for a vacant piece of property that stretches along Crescent Drive from Wilshire Boulevard to Clifton Way. The company plans to convert what is now a parking lot into a five-story Mediterranean-style office building with a 39,000-square-foot Gelson’s Market and three levels of underground parking. Gelson’s has already signed a long-term lease with Snyder.

“Beverly Hills is an underserved area for supermarkets,” said Jerry Snyder, the firm’s managing general partner. “It’s not like it’s your average neighborhood with a Ralphs on one corner and a Lucky’s on the other.”

If approved, the project could take more than two years to complete.

Beverly Hills Mayor Les Bronte said city approval hinges largely on whether studies show the surrounding area can handle an increase in traffic, especially delivery trucks in the alley the project would share with the valet parking operation for Spago restaurant.

If traffic will not cause problems, he said, the project would be a welcome addition to the city. “I’m very excited about getting a Gelson’s in Beverly Hills. It’s a top-quality market,” he said. “And the office space makes the project even more desirable.”

Gelson’s, which operates a store in nearby Century City, had been eyeing the location for at least two years, said Bernie Briskin, president and chief executive of Arden Group, which owns the Gelson’s chain. Demographic studies have shown that Gelson’s customers who live east of Rodeo Drive want a store closer to their homes, he said.

Briskin said Arden had originally sought to put a free-standing market on the site but eventually approached Snyder about incorporating it into a larger, mixed-use project because city officials saw the parcel as a “gateway” to the city for eastbound motorists and wanted something more.

As planned, the market would take up the first floor of a 120,000-square-foot building facing Crescent. The office building lobby would face Wilshire. An additional 192 spaces of parking would be built at the corner of Clifton to accommodate Spago diners, Snyder said.

Office space is tight in the posh area. The vacancy rate in the 23 buildings within the Golden Triangle edged down to 7.9% in the first quarter of this year, and average asking lease rates have risen to nearly $2.70 per square foot per month, according to data from Los Angeles-based CB Richard Ellis.

But it will be almost a year before the project can break ground. Snyder has submitted plans to the Beverly Hills Planning Department but must also conduct environmental reports and face public hearings before construction can begin. No office tenants have been signed, and Snyder has yet to take out bank financing to fund the project.

Traffic concerns may not be his only hurdle at City Hall. At five stories, the project is taller than local zoning laws allow, and Snyder will have to get permission from the City Council to build that high. While Councilwoman MeraLee Goldman supports construction of an office complex and supermarket at the site, she said she would encourage Snyder to add a senior housing component to the project.

Even if he does get the green light from the city, it will be another 18 months before the project opens its doors, time enough for the region’s hot commercial real estate market to cool. But Snyder said that given the lack of competing projects in the area, timing is not a concern.

“The market is strong, and Beverly Hills has no [office] space,” he said. “We’re not worried.”