Can downtown Los Angeles make a comeback? Izek Shomof, who was part of its earlier revival and once called the “King of Spring” because of the developer’s transformation of the Spring Street corridor in the early 2000s, thinks it can. That’s his number one goal, bringing the city back to what it was before the pandemic. Developers and investors need to work with politicians to fix the homelessness crisis, and then they can take back the streets, he said. It is easier said than done.
But in the meantime, he has another project, in another downtown, on his mind.
Shomof and I sat on the 10th floor of his recent, highly discounted Long Beach buy and discussed his plans to turn the offices into apartments. He purchased the office tower on Ocean Boulevard for $50 million, or about $109 per square foot. The 24-story, 460,000 square foot property had a $135.5 million price tag a decade earlier.
He previously snagged another in Glendale, and so that broker reached out about Long Beach — and Shomof was in. Because of the deep discount, the numbers made sense, he said. At the prior price tag, he’d have to charge $10,000 monthly rents for a conversion to pencil. His price probably puts it closer to the average of $2,000.
The office tower is around 50 percent occupied, so he’ll convert the vacant space first, allowing the tenants, who have around three to five year leases, to stay.
Shomof was among the first developers to make use of Los Angeles’ adaptive reuse ordinance, and he has done his fair share of conversions. The hardest parts are approval times and fees, he said. The “fees are killing us,” he said.
For the Long Beach tower, he hopes to complete it in five years, and said he can break ground as soon as he gets the greenlight from the city. He doesn’t see any reason why he wouldn’t.
Shomof walked me through the fully vacant 10th floor, which helped me visualize how each of the 391 apartments would have a view of the ocean or the skyline.
The next step is to find a tenant for the ground-floor restaurant at the corner of Pine Avenue and Ocean Boulevard. Solita’s Tacos and Margaritas sign is still up — and speaking of signage, Wells Fargo can keep its top signage as long as the bank is there, Shomof said.
Favor
A lot of the people in Los Angeles’ inner commercial real estate circle wanted Rick Caruso to run for office … mayor or governor. He chose not to, and he hasn’t endorsed a mayoral candidate, but the billionaire developer has totally endorsed California governor hopeful Matt Mahan. Does that make him heir to the what-would-have-been Caruso vote?
What we know is that Mahan has a roster of some heavy-hitters of the real estate world in his corner. His Los Angeles benefactors include Caruso, Victor Coleman’s Hudson Pacific Properties, Douglas Emmett’s Jordan Kaplan, Related California’s Bill Witte and “Selling Sunset” star Jason Oppenheim. (The San Jose mayor counts the Sobrato Organization as a backer, too).
Oh, and there’s a L.A. fundraiser in the works co-hosted by Oppenheim and Caruso. Stay tuned.
Kilroy shuffle
Late last month, Kilroy Realty reshuffled its board of directors. The real estate investment trust helmed by Angela Aman, named a new board chair, and chairs of the audit and executive compensation committees (all internal moves). So, let’s take a look at the cash they’ll pocket.
Chairman Gary Stevenson’s annual cash compensation will be $175,000; Edward Brennan, now chair of the audit committee, will take home $110,000; and chair of the executive compensation committee Jolie Hunt, $105,000.
It’s a bit of musical chairs: Stevenson succeeded Brennan as chair of the board (Brennan was interim chair of the audit committee, too), and Hunt replaced Stevenson as exec comp chair when he was elevated to the only chair that really matters.
Bren exits another downtown
The country’s richest real estate developer Donald Bren appears to be ditching downtowns. Last year, Irvine Company sold its last downtown San Diego office tower after a year-long, discounted selling spree (and may be selling another in downtown Chicago). Now, Irvine Co. sold a downtown Pasadena office building, also at a discount. The behemoth sold the Pasadena property to East West Bank for about $98 million, after purchasing it for $144 million in 2012. What’s next?
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Commercial
Los Angeles
Izek Shomof lands deep discount on prime Long Beach office tower
Politics
Los Angeles
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