downtown los angeles arts district€¦ · zoning: m3-1-rio (creative office permitted by right,...

INVESTMENT / OWNER-USER OPPORTUNITYOFFERING MEMORANDUM

DOWNTOWN LOS ANGELESARTS DISTRICT

WWW.LAREALTYPARTNERS .COM

2017 E. 8TH STREET, LOS ANGELES, CA

EXCLUSIVE ADVISORS:

CHRIS HOUGEPRINCIPAL(310) [email protected]

© 2018 L.A. Realty Partners. DRE Lic. #01434161. The information above has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified itand make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions orestimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which shouldbe evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitabilityof the property for your needs.

2029 CENTURY PARK EAST y SUITE 515 y LOS ANGELES, CA 90067w w w . l a r e a l t y p a r t n e r s . c o m

TABLE OF CONTENTSCONFIDENTIALITY AGREEMENTPROPERTY SUMMARYFLOOR PLANSZONING & LAND USE OVERVIEWREPOSITIONING & REDEVELOPMENTMARKET OVERVIEWSALE COMPARABLESCREATIVE SPACE FOR LEASEAREA OVERVIEW

2017 E. 8TH STREETLOS ANGELES, CALIFORNIA

OWEN FILETISENIOR EXECUTIVE DIRECTOR(310) [email protected]

P. 1P. 2P. 12P. 15P. 19P. 20P. 21P. 23P. 24

CONFIDENTIALITY AGREEMENTTHE INFORMATION CONTAINED IN THE FOLLOWING INVESTMENTSUMMARY IS PROPRIETARY AND STRICTLY CONFIDENTIAL. IT ISINTENDED TO BE REVIEWED ONLY BY THE PARTY RECEIVING IT FROM L.A.REALTY PARTNERS AND SHOULD NOT BE MADE AVAILABLE TO ANYOTHER PERSON OR ENTITY WITHOUT THE WRITTEN CONSENT OF L.A.REALTY PARTNERS. THIS INVESTMENT SUMMARY HAS BEEN PREPAREDTO PROVIDE UNVERIFIED INFORMATION TO PROSPECTIVE PURCHASERS,AND TO ESTABLISH ONLY A PRELIMINARY LEVEL OF INTEREST IN THESUBJECT PROPERTY.

THE INFORMATION CONTAINED HEREIN IS NOT A SUBSTITUTE FOR ATHROUGH DUE DILIGENCE INVESTIGATION, AND MAKES NO WARRANTYOR REPRESENTATION, WITH RESPECT TO THE INCOME OR EXPENSESFOR THE SUBJECT PROPERTY, THE FUTURE PROJECTED FINANCIALPERFORMANCE OF THE PROPERTY, THE SIZE AND SQUARE FOOTAGE OFTHE PROPERTY AND IMPROVEMENTS, THE PRESENCE OR ABSENCE OFCONTAMINATING SUBSTANCES, PCB’S OR ASBESTOS, THE COMPLIANCEWITH STATE AND FEDERAL REGULATIONS, THE PHYSICAL CONDITION OFTHE IMPROVEMENTS THEREON, OR THE FINANCIAL CONDITION ORBUSINESS PROSPECTS OF ANY TENANT, OR ANY TENANT’S PLANS ORINTENTIONS TO CONTINUE ITS OCCUPANCY OF THE SUBJECT PROPERTY.

THE INFORMATION CONTAINED IN THIS INVESTMENT SUMMARY HASBEEN OBTAINED FROM SOURCES WE BELIEVE TO BE RELIABLE;HOWEVER, L.A. REALTY PARTNERS HAS NOT VERIFIED, AND WILL NOTVERIFY, ANY OF THE INFORMATION CONTAINED HEREIN, NOR HAS L.A.REALTY PARTNERS CONDUCTED ANY INVESTIGATION REGARDING THESEMATTERS AND MAKES NO WARRANTY OR REPRESENTATIONWHATSOEVER REGARDING THE ACCURACY OR COMPLETENESS OF THEINFORMATION PROVIDED. ALL OF THE INFORMATION SET FORTHHEREIN.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE DONOT DISTURB TENANTS.

1.

PROPERTY OVERVIEW2017 E. 8TH STREET (“Property”) is a an existing warehouse buildingof approximately 23,486 rentable square feet, located in the ArtsDistrict area of Downtown Los Angeles, home to some of the topcreative companies in Los Angeles, with world-class amenities,restaurants and specialty cafes. This area is seeing interest from alarge concentration of tenancy in media, technology, culinary,architecture and creative companies.

The Property is situated on approximately 1.32 acres of land.

The Property is owner-occupied, and provides an excellent opportunityan investment or to upgrade to a creative build-out to achieve marketrental rates.

The Property is prominently located at the corner of 8th Street andLawrence Street. Immediately across the street from the LA Timesfacility.

This area is rich in entertainment, digital and print media, E-commerce,advertising, transportation and other technology firms.

SITE DESCRIPTIONLOCATION: Located within the Arts District area of Downtown LA

ADDRESS: 2017 E. 8th Street, Los Angeles, CA 90021

ACCESS: Vehicular access via Lawrence Street currently, howeverthere is already an existing curb exit on 8th Street with an existing gate

ZONING: M3-1-RIO (creative office permitted by right, can build up to85,000 SF structure; buyer to verify)

APN: Four parcels: 5156-029-028, 5166-029-029, 5166-029-032 and5166-029-034

LOT SIZE: ±1.32 acres (57,613 square feet)

YEAR BUILT: 1993

PROPERTY SUMMARY

2.

CONSTRUCTION DETAILThe building is rectangular-shaped.

FOUNDATION: Masonry construction

CEILINGS: Up to 29’6”

RESTROOMS: Common area men’s and women’s restrooms arelocated on the first and second floors of the office portion of theProperty

MECHANICAL DETAILHEATING AND COOLING: Rooftop package units

POWER: 1200a/277-480w 3p 4w Heavy

PROPERTY SUMMARY

3.

I-10 FREEWAY

LAWRENCE ST.

E. 8TH ST.

4.

PROPERTY SUMMARY

SUBJECTPROPERTY

FUTURE DEVELOPMENTAND AMENITIES

PROPERTY SUMMARY

5.

AERIAL VIEW

E. 8TH

ST.

SUBJECTPROPERTY

S. ALAMEDA ST.

PROPERTY SUMMARY

6.

DOWNTOWN LOS ANGELES AERIAL VIEW

PROPERTY SUMMARY

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PROPERTY SUMMARY

8.

9.

PROPERTY SUMMARY

PROPERTY SUMMARY

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PROPERTY SUMMARY

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FLOOR PLAN

8TH STREET

LAWREN

CE STREET

FLOOR PLANS

12.

SECOND FLOOR PLAN

FLOOR PLANS

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PARCEL MAP APN#: 5166-029-028, 5166-029-029, 5166-029-032, 5166-029-034

ZONING: M3 - Unclassified Commercial/Industrial

FLOOR PLANS

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ZONING & LAND USE OVERVIEW

15.

EXECUTIVE LAND USE SUMMARYThe subject site is located at 2017 E. 8th Street in the City of Los Angeles (the “City”). It consists of 22 lots (four tax parcels) located within the M3-1-RIO Zone (anindustrial/manufacturing zone) and has a General Plan land use designation of Heavy Industrial. The lot area is approximately 57,613.6 square feet, and the existing warehousebuilding at the site is approximately 23,486 square feet. Creative office uses are permitted by-right in the M3 Zone, as well as retail and commercial uses.

The subject site is located within the East Los Angeles State Enterprise Zone, which allows parking for office uses at a ratio of 1 for every 500 square feet of floor area. Themaximum permitted floor area ratio is 1.5:1, which would permit a total floor area of approximately 86,420.4 square feet. The “RIO” designation refers to projects that arelocated near the Los Angeles River, and imposes additional guidelines for sites within 2,500 feet of the River. The subject site is approximately 2,900 feet from the River (exactdistance to be confirmed).

The Properties are located at 1120 S. Lawrence Street and 2005, 2009, 2013, 2017, 2021, 2025 and 2029 E. 8th Street in the Downtown Arts District adjacent area of the City(the “subject site”). The subject site is comprised of four separate tax parcels, including APN 5166-029-028, 5166-029-29, 5166-029-032, and 5166-029-034. The subject siteis located within the municipal boundaries of the City of Los Angeles (hereinafter referred to as the “City”) and is subject to development restrictions imposed by the ZoningCode sections of the Los Angeles Municipal Code (“LAMC”).

SUBJECT SITE INFORMATIONThe subject site is rectangular-shaped and consists of 22 lots at thenortheast corner of S. Lawrence Street and E. 8th Street, including twolots comprised of a vacated alley with frontage on S. Lawrence Street.The vacated alley runs north of the subject site, measuring 15 feet wideand is gated at the S. Lawrence Street frontage2. These lots comprisefour separate tax parcels, including APN 5166-029-028, 5166-029-29,5166-029-032, and 5166-029-034, with a total lot area of approximately57,613.6 square feet.

The subject site is located in Council District 14 (represented byCouncilmember Jose Huizar) and is within the Downtown Los AngelesNeighborhood Council area. It is also located in the Central CityRevitalization Zone, and the East Los Angeles State Enterprise Zone.(Please refer to “Exhibit A” for provisions relating to the Central CityRevitalization Zone and the East Los Angeles State Enterprise Zone).


16.

The subject site is located in the Central City North Community Plan area and is withinthe M3-1-RIO Zone. All of the lots comprising the subject site have a General Plan LandUse designation of Heavy Manufacturing. The M3 Zone is a heavy industrial zone thatallows for the highest intensity of industrial uses, including various manufacturing uses(including alcohol, concrete, and asphalt), freight yards, mills, and fabrication plants.Residential uses with either dwelling units or guest rooms are prohibited in the M3Zone3. The -1 designation refers to the applicable Height District, which restricts themaximum floor area ratio (FAR) to 1.5:1 (one and one-half times the buildable area of thelot). The RIO designation refers to the recently approved River Improvement Overlay,which imposes new guidelines for properties within 2,500 feet of the Los Angeles River.The subject site is approximately 2,900 feet from the River (exact distance to beconfirmed).

Based on a total lot area of 57,613.6 square feet, the maximum allowable FAR in the M3-1-RIO Zone the subject site has the “by-right”4 potential to be developed with up toapproximately 86,420.4 square feet of floor area. The existing building at the subject siteis approximately 23,486.0 square feet, based on Assessor’s information accessedthrough ZIMAS.

SUBJECT SITE INFORMATIONThe table that follows lists the property addresses, APN’s, legaldescription, zoning, existing uses and lot areas of the subject site:


17.

ZONING RESTRICTIONSThe subject site is zoned M3-1-RIO. The zoning restrictions of the subjectsite are discussed in more detail in the following table:


18.

OFFERING TERMS2017 E. 8th Street is being offered for sale without an asking price. Allinvestors should base their offer on the “As-Is, Where-Is” condition ofthe Property.

PRICE: Unpriced

NET RENTABLE AREA: 23,846 RSF

IN-PLACE N.O.I.: Negotiable

PERCENTAGE LEASED: TBD

YEAR BUILT: 1993

LOT SIZE: ±1.32 acres (57,613 square feet)

LEASE BACK: The Property is occupied entirely by the owner. Theowner intends to vacate the premises. The owner requires a short-termlease back for a negotiated period of time and rent.

INVESTMENT HIGHLIGHTSIMPROVING RENTS: Rents are rapidly trending in a positive direction.Average creative office rental rates range from $30.00 per square foot,per year, nnn, to $48.00 per square foot, per year, nnn.

AMENITIES: The Property is located in the Arts District area ofDowntown Los Angeles, which some of the best restaurants, cafes andamenities anywhere in Los Angeles.

STRATEGIC LOCATION: The Property is strategically located within aquarter-mile of the 10 Freeway.

COMPETITIVE POSITION: The Property is well located to capitalize onthe growth of creative tenants that are targeting high volume, free-standing buildings with great identity.

REPOSITIONING/REDEVELOPMENT: Prospective buyers are encourageto use their expertise in repositioning the Property as a creative officebuilding, or taking advantage of the 1.5 FAR and build, or expand theexisting structure up to approximately 86,000 square feet.

REPOSITIONING & REDEVELOPMENT

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LOS ANGELESThe Los Angeles office market is comprised of approximately 437 millionsquare feet and is the third largest in the nation. This market ended the4Q 2017 with a vacancy rate of 9.97%. Rental rates ended 4Q 2017 at anaverage of $35.03 per square foot, per year.

The Arts District area has reached a point where absorption and rentsare rapidly increasing.

ARTS DISTRICTThe Property is located within the Arts District area of the DowntownLos Angeles market. Vacancy for this area at the end of 4Q 2017 is34.6%, and average asking rents of $40.92 per square foot, per year, nnn.

TOTAL RSF VACANCY QUOTED RATESLos Angeles (Total) 437,430,499 9.97% $35.03/SF/year

Downtown Los Angeles 71,869,411 12.5% $37.30/SF/year

1 MILE 3 MILES 5 MILES2014 Population 39,583 267,989 803,9342018 Population 40,032 271,081 812,256

2014 Households 22,550 137,277 362,7682018 Households 22,843 139,427 368,888

Median HH Income $63,400 $62,077 $50,908

Per Capita HH Income $59,147 $56,029 $41,786

Average HH Income $103,649 $109,041 $91,528

MARKET OVERVIEW

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SALE COMPARABLES

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SALE COMPARABLES

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CREATIVE SPACE FOR LEASE

“Though little of the area’s agricultural roots remain, the warehousesand loading docks of the industrial heyday are remarkably well-preserved and give the neighborhood its distinctive feel.”

“...the old punk clubs are gone, but the galleries and artists are stillthere, as are cafes, restaurants and high-end shops. And with theGold Line [which will directly link the Arts District with theWestside]... passenger rail has returned to the Alameda Streetcorridor once again.”

- L.A. Times, March 26, 2016

L.A. ARTSDISTRICT

“Last week, the California Transportation Committee awarded...$14.85 million for a host of bike lanes and pedestrian-friendlyimprovements in the Arts District.”

“In the Arts District, the money will fund pedestrian and bikingconnections to transit stops and the under-construction SixthStreet Viaduct replacement project... New bike lanes, curbextensions, crosswalks, pedestrian lighting, and added traffic lightsare also planned for the area.”

- Curbed, March 19, 2017

“A former cardboard recycling yard in Downtown’s Arts District soldlast week for more than double the price it fetched just two yearsago, a sign of quickly rising land values in a fast-developingmarket.”

“...Tishman Speyer..., purchased two Arts District buildings...lastmonth for about $25 million. That’s more than triple the pricepaid...between 2014 and last year.”

- Los Angeles Business Journal, December 6, 2016

24.

AREA OVERVIEW

SOUTHERN ARTS DISTRICT: A haven for inspiring Artists during the 70’s and 80’s, the original Arts District pocket still holds the flair of yesteryear and continuesswinging upward. Today, most of the action resides in the Southern Arts District along the South Santa Fe corridor between 7th Street and the 10 Freeway. Asnapshot of the development projects in the pipeline:

SOHO WAREHOUSE: The building known as five-story poured in place concrete buildingcommonly known as the David Harvey building located at 1000 South Santa Fe Avenue hasbeen acquired by the investment group behind the famed Soho House venture, whom are inthe planning stages for this site.

FORD FACTORY: Warner Music, a staple in Burbank for the past 4 decades, has secured along-term lease consisting of roughly 257,000 SF in the former Ford Factory building at theSW corner of Santa Fe Avenue and 7th Street. In 2018, this site will be the home of WarnerMusic’s West Coast Headquarters.

2145-2161 SACRAMENTO STREET AND 2136-2149 BAY STREET: Currently the home ofHyperloop One’s creative office campus, the approximately 1.7 acre site has designs for anew ground-up 222,000 SF office structure with 444 parking spaces.

2110 BAY STREET: Local LA developer Jade Enterprises acquired the approximately 1.8 acresite and is in the early stages for a mixed-use project potentially containing 110 live/workunits, office space, as well as boutique retail and restaurant concepts.

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AREA OVERVIEW

2143 VIOLET STREET: Vancouver based Onni development is in the planning stages for apotential 13 story 509 unit residential over +/- 123,000 SF commercial development.

AMP LOFTS: Construction has begun on the project located at the NW corner of Santa FeAvenue and 7th Street which contains 320 residential units and approximately 20,000 SF ofretail space.

2144 VIOLET STREET: Lowe Enterprises is planning an office building of approximately91,000 SF that reaches nine stories tall.

AT MATEO: A boutique retail and creative office development is near completion at thecorner of Mateo Street and Palmetto Street. The project is approximately 180,000 SF and isslated to be completed in 2017.


26.

AREA OVERVIEW

6TH STREET BRIDGE: A nearly $500 million federally funded infrastructure project thatwill connect the Arts District to Boyle Heights is under construction and is scheduled to becompleted by late 2020. In addition to the traditional car passage way, the bridge will alsohost bicycle and walk paths and will also bring new parks and a public art plaza.

ART HOUSE: A curated space for creatives, the Art House is an Arts District destination of53 live/work loft units


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AREA OVERVIEW

THE ARTS DISTRICT - DOWNTOWNREIMAGINEDThe Arts District is a thriving hub for Los Angeles tastemakers andtrendsetters. Located east of Little Tokyo and west of the LA River, theArts District is packed with beautiful galleries, top-flight restaurants,quirky shops, and one-of-a-kind boutiques.

This is an area rich with character and rife with new opportunities. Itboasts transformational, innovative mixed-used developments like OneSanta Fe, At Mateo, and the Garey Building. Thanks to a surge of freshinvestment activity, the Arts District is booming with housing, retail, andcreative office development. Popular restaurant developers and chefsare looking to the Arts District for their next industry-shaping projects;Ori Menashe, Genevieve Gergis, Tony Esnault, and Angelo Auriana havealready jumped at the opportunity to become a part of this evolving sliceof the Los Angeles landscape.

With nearby locales like Villain’s Tavern, Bar Mateo, Angel City Brewery,and the eagerly anticipated (and very private) SohoHouse, the ArtsDistrict is primed to become the new home to successful businesses andindividuals alike, making this the prime opportunity for multifamily andretail development.

The Arts District is designated under the Central IndustrialRedevelopment Project that is, in effect, contributing to a thrivingresidential and commercial environment through the redevelopment ofunderutilized, neglected, and vacant parcels. The property itself isfavorably endowed with convenient access to major arterial freewaysand public transportation, excellent urban walkability, and closeproximity to restaurant, retail, and commercial amenities. As it sohappens, some of the Arts District’s most renowned eateries includingUrth Caffé, Church and State, The Factory Kitchen, Zinc Café, and BlueBottle Coffee, are within walking distance.

RETAIL: The Arts District has undeniably become a hot spot forredevelopment, especially in the retail sector. With amenities includingart galleries, photography studios, artisan eateries, craft coffee houses,and At Mateo—the highly-anticipated open-air shopping mall—the areahas evolved into a significant entertainment hub and walkable urbanneighborhood.

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AREA OVERVIEW

29.

AREA OVERVIEW

TRANSPORTATIONLos Angeles County is the heart of the transportation and distribution network for the southwest portion of the United States. It is home to fivekey airports, two major seaports, 15 railroad companies, an extensive network of freeway systems, and an expanding metro Rail mass transitsystem.

AIRPORTS: The Los Angeles County area is served by Los Angeles International Airport (“LAX”), Bob Hope Airport, Ontario International Airport,Long Beach Airport and John Wayne (Orange County) Airport. LAX is the fourth busiest airport in the world and has the third largest passengerterminal in the nation, servicing approximately 75 airlines and over 60 million passengers annually. It is also the second largest cargo airportin the United States and fifth worldwide, handing nearly 2 million tons of cargo annually via more than 1,000 flights per day.

FREEWAYS: Acclaimed for having the greatest and most-utilized freeway system in the world, the 1,700-mile freeway network providesconvenient access to most areas within the greater Los Angeles region and points beyond. The area is well served by Interstates 5, 10, 15, 105,110, 210, 405, 605, and 710, as well as Freeways 60, 90, 91, 101 and 134.

RAILROADS: The Los Angeles area is linked to the rest of the nation and Canada via 15 railroads. Approximately 8 billion tons of manufacturedgoods are carried to and from Los Angeles annually. Los Angeles is the third largest trucking and warehousing industry market in the UnitedStates.

SEAPORTS: The two major seaports in the Los Angeles area are the Port of Los Angeles and the Port of Long Beach, which rank #2 and #1 inthe nation, respectively, in container traffic handled. Combined they function as the third busiest in the world, after Hong Kong and Singapore.They serve more than 25% of all U.S. waterborne international trade, and trade with Asia accounts for nearly 90% of total port imports andexports. Both ports are continuing to expand their facilities and millions of dollars are being spent on numerous capital improvement projects.

METROLINK AND METRO EXPO LINE (“MTA”): The Los Angeles MTA is the primary provider of transit services for the region and provides avariety of alternatives to meet the needs of the area’s highly diverse population. Combined the Metrolink and MTA serve of 300,000 passengerson a daily basis and connect six Southern California counties: Los Angeles, Orange, San Bernardino, Riverside, Ventura and San Diego.

The new 8-mile Metro Expo Line offers connection from Downtown Los Angeles to Culver City and estimated ride time between the two is lessthan 30 minutes. The second phase of this extension into Santa Monica is nearing completion and testing of the crossings has begun.

TRANSPORTATIONHIGH SPEED RAIL: In 2008, California voters approved a $10 billionbond in support of plans to build a high speed rail corridor linkingnorthern and southern California, with trains reaching speeds of up to220 miles per hour. The corridor would likely pass through UnionStation. The project is still in the planning stages and its future isuncertain. In November 2011, the California High Speed Rail Authorityreleased a new cost estimate of $98.5 billion, versus an original estimateof $43 billion. The completion date was also revised from 2020 to 2034.

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AREA OVERVIEW

NEIGHBORHOOD AMENITIES

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AREA OVERVIEW

ARTS DISTRICT AMENITIES

WURSTKÜCHE800 E. 3RD STREET

URTH CAFFE451 S. HEWITT STREET

SOHO HOUSE1000 S. SANTA FE AVENUE

VILLAINS TAVERN1356 PALMETTO STREET

BLUE BOTTLE COFFEE582 MATEO STREET

ANGEL CITY BREWERY216 S. ALAMEDA STREET

CHURCH & STATE1850 INDUSTRIAL STREET

URBAN RADISH661 IMPERIAL STREET

DAILY DOSE1820 INDUSTRIAL STREET

GROUNDWORK COFFEE811 TRACTION AVENUE

STUMPTOWN COFFEE806 S. SANTA FE AVENUE

AMERICANO923 E. 3RD STREET

BESTIA2121 E. 7TH PLACE

FACTORY KITCHEN1300 FACTORY PLACE

LITTLE BEAR1855 INDUSTRIAL STREET

FIFTY SEVEN712 S. SANTA FE AVENUE

32.

AREA OVERVIEW

downtown los angeles arts district€¦ · zoning: m3-1-rio (creative office permitted by right,...

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