Sterling Organization has purchased two retail buildings on Melrose Avenue, which remains one of Los Angeles’ top luxury corridors despite the e-commerce onslaught.
The West Palm Beach, Florida-based real estate investment firm paid $35 million for the portfolio, through its third institutional fund, Sterling Value Add Partners III.
The buildings are located in West Hollywood at the intersection with North Orlando Avenue. The portfolio includes a 21,379-square-foot building at 8378-8384 Melrose Avenue —it is 71-percent occupied, with leases from Rachel Zoe and Electric Feel Management — and a 3,275-square-foot building at 8379 Melrose Avenue. It is fully leased to Casper, the bedding company.
The two-property portfolio is Sterling Organization’s sixth and seventh investments on behalf of the $497-million SVAP III fund. The firm owns 54 properties across the country with more than 10 million square feet of primarily retail space.
Last year, Sterling paid $23.8 million for a Huntington Park Shopping Center, and a shopping center in Westlake Village for $35 million through SVAP III fund. Sterling also sold a storefront on Rodeo Drive last year to Louis Vuitton’s parent company for $110 million.
Brick-and-mortar locations on Melrose Avenue have been thriving despite the dominance of e-commerce. Melrose is the biggest local competition to Rodeo Drive for high-end tenants where they can show off new ways to adapt with a “digital-meets physical” experiences. The strip is home to restaurants and lifestyle and luxury brand retailers, including The Row, Chloe, Fig & Olive, the new Nordstrom Local concept store, Rag & Bone, and the Kardashians’ store.
Construction on the Melrose Triangle complex is slated to open next year on Melrose Avenue with 82,000 square feet of ground-floor retail. And nearby, a 9,000-square-foot AllBright, a private club geared toward women, is opening this summer on Melrose Place.