Latest Arts District creative conversion wants to woo Tesla

Developer Koar bought warehouse property for $13.5M, plans 30,000-sf office space

Nov.November 03, 2016 06:57 PM
1580 Jesse Street
Brandon Michaels and the property at 1580 Jesse Street

It hasn’t taken long for the ripple effects of Warner Music Group’s lease to wash over the Arts District.

Koar, a Los Feliz-based developer, just purchased a one-acre property in the neighborhood for $13.5 million, and it wants in on the latest neighborhood craze: the creative office conversion.

The property at 1580 Jesse Street is currently occupied by a 24,000-square-foot food processing warehouse, which Koar plans to develop into a 30,000-square-foot office, The Real Deal has learned.

Koar purchased the property from Select Produce, a fruits, vegetables and dairy distributor for Southern California. The developer paid in cash, Rothman said, and will retain the site for the long term.

The $13.5 million price tag equates to about $450 per square foot for the planned conversion, or $301 per square foot in terms of land.

Koar has tapped architect Jeffrey Eyster to design the conversion. The sale was brokered by Brandon Michaels of Marcus & Millichap.

“We’re trying to create a space that really allows the tenants to have a community,” said Bruce Rothman, a principal at Koar, “It won’t be to the extent of a WeWork space, but it’ll be a very collaborative environment.”

The main draw, however, would be ample, single-story parking.

“We have more parking that almost anyone else could offer,” Rothman said.

Just around the block, Warner Music Group will be building out all 257,000 square feet of the Ford Factory building, renovated by Shorenstein. The leasing of the building, which was a long time coming, has been seen as a turning point for the office market in the neighborhood.

Across the street from Koar’s site, the Colorado-based Continuum Partners filed its own plans for a 107,000-square-foot office building. Meanwhile, Tishman Speyer recently paid $24.5 million for Hyperloop One’s 1.7-acre office campus on Sacramento and Street, TRD reported.

Also nearby is Hudson Pacific Properties’ office and retail redevelopment of the old Coca-Cola bottling plant on Central Avenue.

“It starts with residential and amenities [such as restaurants] and the office typically follows suit,” Hudson’s chief investment officer, Alexander Vouvalides, told the L.A. Times. “We think [the Arts District] is the next great up-and-coming office market in Los Angeles.”

Warner Music Group and Hyperloop One may be off the market, but Koar is setting its sights high.

“Our ideal tenant? The design group for Tesla,” Rothman said, with humor.

“We have a lot of interesting prospective tenants — one thing is for sure, they’re unlikely to be accountants. But we’re open to all tenants.”

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