• News
  • Real Estate

Sunset Strip hotel boom replacing night, lowlife

LOS ANGELES -- It was rocked by the Doors in the 1960s, Van Halen in the ’70s and Guns N’ Roses in the ’80s.

Now California’s Sunset Strip is getting a new sound: the booms of buildings being demolished and new ones developed.

Known for its giant billboards, celebrity hot spots and rock clubs including the Whisky a Go Go and the Viper Room, Sunset Boulevard is getting a 21st century makeover.

Some aging landmarks -- like the House of Blues and Larry Flynt’s Hustler Hollywood erotica store -- are on their way out, to be replaced by luxury lodging by hoteliers including Ian Schrager.

Investors AECOM Capital, CIM Group and Schrager all have buildings with hotels planned for the Sunset Strip.

The projects are part of a record number of developments along the 1.6-mile stretch of Sunset Boulevard running through the city of West Hollywood, where hotel occupancies were among the highest in Los Angeles County last year.

“We like turnaround neighborhoods,” said Warren Wachsberger, vice president of Los Angeles-based AECOM Capital, the investment arm of AECOM Technology Corp. (NYSE: ACM).

“If you look at the evolution of Sunset Boulevard, 10, 15 years ago, you couldn’t move because of all the traffic. It was dirty and dangerous. Today, Sunset is a dramatically different place.”

At Sunset near San Vicente Boulevard, Hustler Hollywood, which opened in 1998, is being sold to an undisclosed buyer, said Arthur Sando, vice president of communications for Flynt Management Group LLC.

The store, which is relocating, may be torn down and replaced with a hotel, said John Keho, assistant director at West Hollywood’s Community Development Department.

Luxury hotel

A half block over, a Saudi Arabian company is “close to breaking ground” on a luxury hotel with about 190 rooms on a lot purchased for about $30 million in 2012, said Tony Azzi, a Los Angeles-based broker with Marcus & Millichap.

He wouldn’t identify the company because of confidentiality agreements with his client.

On the eastern end of the Strip, as the West Hollywood portion of Sunset Boulevard is known, plans call for the House of Blues, which opened in 1994, to be torn down and replaced with a hotel-and-condominium project.

Hotel occupancies in West Hollywood last year climbed 6.5 percentage points to 82 percent.

That compares with total occupancies of 77 percent last year in the Los Angeles and Long Beach area, and 71 percent statewide, according to STR Inc. (NYSE: STRI) a Hendersonville, Tenn.-based research firm.

Nightclub site

AECOM and developer Combined Properties Inc. are planning 149 hotel rooms, 40 condos, five rental units and an entertainment venue at the House of Blues site.

They are scheduled to start building toward the end of 2015, with construction taking about two and a half years, said Marianne Lowenthal, executive vice president of development for Washington-based Combined Properties. She wouldn’t say how much the project will cost.

At Sunset and La Cienega Boulevard, CIM Group last year started to raze buildings including the Tiffany Theater, almost 50 years old at the time and once a filming location for the television series “77 Sunset Strip.”

Replacing them will be a four-building complex that will include the high-end James Los Angeles hotel as well as apartments, shops and restaurants. The hotel will open in 2016, the company said in March.

Schrager and Bethesda, Maryland-based Marriott International Inc. (Nasdaq: MAR) are seeking to build a 148-room luxury Edition hotel, along with condos and stores, on the southeast corner of Sunset and Doheny Drive.

The group is planning to submit final architectural plans for the site, once home to the upscale restaurant Scandia, in the next few months, according to Keho of West Hollywood’s development department.

Area record

The Sunset Strip developments planned or already being built “easily amount to $600 million or more,” said Patrick Amos, a senior associate in Beverly Hills at brokerage CBRE Group Inc. (NYSE: CBG). That’s a record for the area, he said.

“This is the most construction activity we’ve seen on the Strip since 1984,” Keho said. “We have several multistory buildings in the works, and we haven’t seen that for decades.”

In the early 20th century, avocado groves covered what is now known as the Sunset Strip, before shops, restaurants and bars started to populate the boulevard beginning in the 1920s, according to the Sunset Strip Business Association, a not-for- profit group run by local business owners.

Oversight by the Los Angeles County Sheriff’s Department -- a more relaxed law-enforcement agency at the time than the L.A. Police Department -- helped the Strip become one of the hottest entertainment spots in the country.

Home to nightclubs including Ciro’s and Mocambo, the Strip was frequented by such celebrities as Frank Sinatra, Marilyn Monroe and Humphrey Bogart, as well as mobsters Bugsy Siegel and Mickey Cohen.

Doors, Depp

The rock club Whisky A Go Go opened in the 1960s, and the Doors, fronted by Jim Morrison, spent time as the house band in 1966.

Other late-night draws along the Strip include the Roxy Theatre, Rainbow Bar & Grill, Skybar at the Mondrian Los Angeles hotel, and the Viper Room, opened by actor Johnny Depp in 1993. Actor River Phoenix collapsed and died outside the club later that year.

“The clubs have gone up and down in interest, and with it the interest in the Strip,” Keho said. “The Strip has always been an entertainment area. Today, all the new hotels will help attract a higher-profile entertainment crowd and people from around the world. And that in turn will spawn more destination venues like restaurants and bars.”

A.J. Khair Development & Construction and its partners are exploring project ideas for their lot at Sunset and North Harper Avenue that may include a hotel, said Demitri Samaha, president of the Los Angeles-based company. The site was home to the Beach on Sunset, a now-closed nightclub.

‘One Sunset’

“There is only one Sunset Boulevard,” Samaha said. “It is centrally located, between Beverly Hills and Hollywood. Sunset is like a landmark. As time goes by, it is a brand name that’s here to stay.”

The sudden influx of multistory projects is being met with some neighborhood resistance.

Already plagued by bumper-to-bumper traffic most hours of the day, residents are concerned about additional congestion in the neighborhood and the demolition of historic buildings.

Groups such as Save Sunset Boulevard fear the “Manhattanization of the Sunset Strip” will cause “a terrible traffic situation, making local residents virtual prisoners in their own homes and seriously disrupting the lives of thousands of Sunset Boulevard commuters,” Alex Rose, a member of the group, said.

‘Unique atmosphere’

“It is very important to keep the culture of Sunset alive,” said Schrager, who before creating boutique hotel chains was the co-founder of Manhattan’s Studio 54 nightclub.

“Sunset shouldn’t be dominated by steel buildings,” Schrager said. “There shouldn’t be a whitewashing of what I continue to think is a unique atmosphere. It doesn’t mean that you can’t build, but you have to be respectful of what Sunset means to me, to everybody.”

The Strip’s geography, bordered by steep hillsides and residential properties, also complicates and increases the costs of large-scale commercial developments, according to Amos, of CBRE Group.

In Hollywood, at the Strip’s eastern border, a mixed-use apartment and retail project being built by Townscape Management Inc. may be slowed by resistance from West Hollywood and Los Angeles residents who oppose it, according to local news website WEHOVille.

“The goal is to use forward-thinking urban design planning principles combined with timeless, modern architecture,” Tyler Siegel, principal at Townscape, said. The project, at 8150 Sunset Blvd., “is designed to be a modern gateway to Hollywood and the Sunset Strip.”

Billboard policies

Added revenue from large-scale outdoor advertising may help motivate developers to overcome obstacles.

The city is reviewing its billboard policies to streamline the approval process and allow for more creative billboards, Keho said. AECOM and A.J. Khair plan to incorporate outdoor advertising at their projects.

The city of West Hollywood has tried to make Sunset Boulevard more attractive for both residents and developers in the past two years by adding trees, restricting the number of bank branches on the Strip because “they don’t really enliven a street” and widening sidewalks at Sunset Plaza, an area with stores and outdoor cafes, Keho said.

However difficult developing on the Strip may be, an increasing number of Sunset Boulevard landmarks probably will go the way of the Tiffany Theater and House of Blues, making way for glitzy hotels.

“Once you use up all the land on the Strip, the next step is to find all the under-utilized places that can be torn down and rebuilt,” Amos said. “It’s setting up the Strip to be a true hot spot of high-end international lodging.”

User Response
0 UserComments