Downtown to Get Second Gift Mart
In a sizable economic boost for the downtown area, Los Angeles will become one of the leading U.S. centers of the gift industry with the signing of a lease for 1 million square feet of showroom space in the garment district, it was disclosed Friday.
The new tenants will fill the unoccupied portion of the 3-million-square-foot California Mart at 9th and Los Angeles streets, Mart officials said.
The influx of commerce should drive additional business to downtown hotels and restaurants and establish Los Angeles as a prime center of showrooms for the gift and home-accessories industry, said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. He said the industry is an important but often overlooked element of the local economy.
The group leasing the California Mart space includes Dallas Market Center, one of the country’s largest showroom operators, along with British-based DMG World Media and George Little Management, a White Plains, N.Y.-based trade-show management company.
The group plans to strip the California Mart space down to the shell to customize it for gift-industry tenants, said Bill Winsor, president and chief executive of Dallas Market Center. The group will sublease spaces ranging from about 500 square feet to 40,000 square feet to manufacturers, distributors and other showroom tenants who sell products wholesale to the gift trade, Winsor said.
The new lease represents “a huge win for downtown,” said Carl Muhlstein of Cushman & Wakefield, who brokered the sale of the California Mart to current owner Hertz Investment Group last year. The five-building complex is the hub of Los Angeles’ apparel industry and is home to clothing designers, wholesalers and manufacturers.
Los Angeles will have gift marts managed by two of the country’s premier showroom operators: Dallas Market Center and Chicago-based Merchandise Mart Properties, Muhlstein said. Merchandise Mart Properties operates the 720,000-square-foot L.A. Mart gift-industry showroom on South Broadway and Washington Boulevard.
“Some people might argue that two marts will mean too much competition,” Kyser said, “but with two gift marts here, it will make all the more sense for buyers to come to Los Angeles.”
The lease also could “create a ripple effect on other buildings in the area,” Kyser said. “With the Cal Mart full, it may create opportunities for other buildings to snag some of the tenants who might otherwise go there.”
The gift-mart group will begin renovations on its California Mart space this fall. The new showrooms are expected to be open for business in time for the California Gift Show at the Los Angeles Convention Center in July 2002, said Michael Franks, chief operating officer of DMG World Media.
Financial details of the new lease were not disclosed, but it represents rent of approximately $18 million a year at average asking rents for California Mart space. In addition, the cost of renovating the 1 million square feet easily could exceed $35 million.
The lease represents a change of direction for the gift-mart group, which announced early this year that it planned to build a new showroom of up to 1.4 million square feet. But the group said it chose to lease space to save time.
A downtown location is important for the gift industry, Winsor said, to tie in to the twice-yearly California Gift Show, which typically draws about 2,000 exhibitors and 33,000 attendees to the Convention Center. The gift show is owned by DMG Worldwide Media and managed by George Little Management.
The gift show and the California Mart showrooms are aimed at buyers from gift shops, department stores, discount chains, drugstores and other types of distributors and retailers in the $30-billion-a-year U.S. gift industry.
