It didn’t get Rodeo Drive-level pricing, but the interest was apparently electric.
New York-based KLM Equities and Harlington Realty snatched up Tesla Motors’ 3,000-square-foot storefront at 1227 3rd Street Promenade for $15.6 million in a sale that closed closed late last month, according to a release from CBRE. There were many bids on the property, which led to an extensive buyer-vetting process, said CBRE’s Timothy Bower, who represented both parties in the the deal, along with Ken McLeod and Tim Kuruzar of the same firm.
The seller, Tigris Group, an entity registered in Pinecrest, Florida, got $5,200 a square foot for the site. The price is on par with per-square-foot averages the area, Bower said. Tigris made a hefty profit on the parcel it purchased for $2.75 million, or about $917 per square foot, in 2006, according to CoStar.
“The real estate on the Third Street Promenade trades infrequently,” Bower told The Real Deal. “When it does, it is in high demand. Sometimes these deals don’t even get to market. The moment we released this offering, we had a lot of interest in it.”
Despite the new ownership, longtime tenant Tesla Motors’ isn’t switching gears. The luxury electric car company will remain in its showroom and demonstration center with no lease conditions changed, Bower said. The showroom is within a 1938 Art Deco building listed on Santa Monica’s Historic Resources Inventory. The city’s Architectural Review Board required a ruling before Tesla could remodel the façade and update signage.
Bower said the buyer doesn’t plan to file with the review board for additional changes anytime soon.
“It was an investment deal and as long as Tesla’s lease is in place, the property will be in its present form,” Bower said. “If they don’t stay, way down road, there is potential to redevelop. The evolution of the area is a two-story retail format, so that’s certainly a possibility in the future.”
A number of historic buildings in Santa Monica have recently seen redevelopment projects, including a $50 million remake of City Hall and a $265 million renovation of the Santa Monica Place mall.
KLM is not new to Los Angeles nor to pricey deals on the promenade: It purchased the Apple store at 1415 3rd Street Promenade for $100 million, or about $5,700 per square foot, in 2014, according to CoStar.
It also owns the TCL Chinese Theatre in Hollywood, stores on Abbot Kinney Boulevard in Venice and a Citibank in Santa Monica, according to the Los Angeles Business Journal. — Laurie Dove