$8 Million Buys a Building on Rodeo

Commercial real estate entrepreneur Anthony Palermo, whose family has been involved in Rodeo Drive real estate and retail businesses for about as long as people have shopped there, has paid what is probably the highest price ever for a piece of the chic three-block strip: $2,000 per square foot.

Palermo, who maintains homes in both Milwaukee and the Los Angeles area and is already a leading Rodeo Drive landlord, paid $8 million cash for the 4,000-square-foot property at 313-17 N. Rodeo.

Tenants include Lalique crystal and women’s clothiers Celine and BCBG.

While building sales are “few and far between” along the famous strip that caters to the wealthiest of shoppers, “I’d say Rodeo Drive property values are at their peak,” Palermo said. “I have a lot of faith in Rodeo and would buy more if anything was available--but you need the right stores.” Palermo also owns buildings housing Prada, Bernini and other well-known shops.

Property along Rodeo’s focal 300 block has appreciated about 20,000% over the half-century since Palermo’s uncle, Gayelord Hauser, became one of Rodeo’s first developers. In the early 1940s, Hauser built a 4,000-square-foot building for less than $10 per square foot.

In the late 1960s, Palermo’s brother, Giancarlo--then Gucci’s general manager for the United States--helped bring that fashion house to Rodeo as well. And Anthony Palermo signed Hermes to a lease at his building adjacent to Gucci in the early 1970s.

The new record price reflects rental rates of about $14 per square foot per month, said real estate broker Richard Plummer of Cushman & Wakefield, who helped Japan’s Yamashina Co. sell the property it purchased during the last market peak a decade ago.

That rent is roughly four times what talent agents, law firms and other businesses pay for even the best nearby office space.

Cushman & Wakefield recently ranked New York’s Madison Avenue as the world’s most expensive retail street, with rents averaging about $45 per square foot. Rodeo is more comparable to Tokyo’s Ginza, Vienna’s Karntnerstrasse or Orchard Road in Singapore, which ranked 10th through 12th.

Rents on Rodeo, particularly the 300 block, are often four times higher than rents a block away on Beverly Drive, said Bruce Dembo of Dembo & Associates, a retail real estate brokerage specializing in Beverly Hills properties.

“The market continues to pick up” as more high-demographic foot traffic returns to Rodeo, Dembo added.