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12/19/17
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Bow West Capital paid $14 mil for a 54.9k sf ($255/sf) commercial building at 718 S. Hill St, in the heart of downtown L.A.’s Jewelry District. It was sold by UrbanBlox, a locally-based boutique real estate development firm.
The property, built in 1913 and comprised of 718, 720, and 722 South Hill Street, is located between Seventh and Eighth and one block west of South Broadway. Situated in the Historic Core, the neighborhood has become ripe for redevelopment through the addition of the Los Angeles Streetcar, the revitalization of nearby Pershing Square, and the Bringing Back Broadway initiative aimed at reactivating Downtown’s historic stretch of theaters and commercial space.
Cushman & Wakefield’s Mike Condon, Jr., Kelli Snyder, Brianna Demus, and Arianna Nienow acted as exclusive advisor to the seller in the transaction. Bow West Capital was represented by Andrew Sinasohn and Jake Zacuto of the Zacuto Group.
“It was a very unusual situation, given ownership acquired the building two-and-a-half years ago at $8.54 mil to implement their own creative office renovation,” said Condon, Jr. “The seller converted all tenants to month-to-month leases, received approvals for a type 47 CUB, and began base-building improvements to get much of the building to a white box condition to commence lease-up. The opportunity actually began as a two-floor lease opportunity and transitioned into an acquisition with the help of an interrelated investment group with the buyer.”
He added: “This sale demonstrates the value of demystifying a very difficult renovation process for historical assets. It gave the buyer ability to take much of the guess work out of the future renovation and provided a competitive speed to market process versus several other competitive projects in the Historic Core. The huge uptick on pricing to $14 mil in this short period of time is a testament to the seller’s efforts to deliver a near turnkey project. This sale is also significant because 718 South Hill is another traditionally-located Jewelry District building that is going for conversion for something other than jewelry-type tenants. As jewelry retail sales in the area decline, the neighborhood is proving ripe for redevelopment of these buildings into creative office, retail, boutique hotels, and multifamily.”
“The original business plan was to repurpose the building from jewelry use to creative offices and retail on the ground floor,” said Raffi Shirinian, Principal of UrbanBlox. “We secured entitlements for a restaurant with CUBs on the ground floor, pushed forward design/engineering to a near permit-ready condition for the offices above, and operated at a 90% occupancy with interim month-to-month tenants.”
As for the 718 S. Hill Street’s future redevelopment plans, President Sean Beddoe of Bow West Capital said, “We will be starting immediately and turning it back into offices, with creative office on floors seven through three, putting in an art gallery on the mezzanine, and we’re working with a couple of restaurant groups for the retail space on the first floor.”
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