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Tuesday, Mar 19, 2024

Buying In

Retail developer Caruso Affiliated plans to grow its presence in Glendale by expanding across the street from its Americana at Brand mall. Earlier this year, the firm announced the purchase of an 18,000-square-foot lot at the northeast corner of Brand Boulevard and Colorado Street. The acquisition, from homebuilder Frank De Pietro & Sons, included the historic Masonic Temple and two adjacent buildings at 232-38 Brand. The plan is to revamp the multilevel temple into a creative office building and to erect a one-story retail center on the vacant land next door. Construction has started on the temple project, which will open in January as an office for L.A.-based real estate brokerage CBRE Group Inc. Evan Krenzien, vice president of development at Caruso, which is headquartered in L.A.’s Fairfax District, estimated that construction on the retail portion of the development will take about six months. “We hope to break ground by the end of the year and to open by summer of 2016,” he said. “This is a lot that has been undeveloped for a long time. We want to enhance the street-front offering and to continue the same pattern of street-front retail that you see heading north on Brand.” The 9,750-square-foot retail building will house five tenants across the street from Americana at Brand, Caruso’s upscale shopping and lifestyle center. The project follows a familiar pattern of expansion for the developer. “It is common to want to expand around successful projects (and) Glendale is a very powerful market,” said Nick Egelanian, president of retail real estate consulting service SiteWorks in Annapolis, Md. “All developers want successful proprieties, and Caruso is known for building strip centers. Its early centers in Westlake Village and Calabasas are considered some of the best specialty retail in the country.” ‘Interest begets interest’ Billionaire Rick Caruso has pioneered the retail and residential experience in Southern California through his company, one of the largest privately held retail developers in the country. Caruso Affiliated owns more than a half-dozen retail centers in the greater San Fernando Valley, including the Commons at Calabasas, the Encino Marketplace and the Promenade at Westlake. Its Americana at Brand opened in 2008 across from General Growth Properties’ Glendale Galleria mall. Caruso leveraged the success of Americana at Brand to launch into residential development with Excelsior, an adjacent condo project. Rick Caruso has a history of enlarging his footprint in Glendale. In 2011, he purchased the Golden Key Hotel for $16 million and another property for $4 million after the city considered taking them by eminent domain. The land was turned into a retail space for a Nordstrom Inc. store, which vacated the competing Galleria mall. With Caruso Affiliated’s latest expansion, the city approved and streamlined the application for the one-story retail building in accordance with its Glendale Downtown Specific Plan, a set of standards for the revitalization of the area, according to city Public Information Officer Tom Lorenz. Glendale has been working to revitalize its downtown, to increase foot traffic and boost business and residential density. Philip Lanzafame, director of community development for the city, said Caruso’s plans for the Masonic Temple and the additional storefronts will further the city’s appeal. “Interest begets interest and vibrancy begets vibrancy,” Lanzafame said. “You really have a whole half-block that is now being developed, and what was fairly underutilized is now once again productive. That development is good on many different levels – from pedestrian interest to major employers to new producing property. Those are all positive.” The 9,750-square-foot retail building will have spaces that will vary in size depending on the need of the tenant. Krenzien said tenants will likely include a mix of local retailers as well as well-known names. The group also will likely include a barbershop and a coffee shop, he added. “We’re targeting a pool of unique street-front retailers that you may not see everywhere,” he said. “I think we’ll see that it’ll work really well with the Americana and existing street-front retail.” Bill Boyd, senior managing partner of commercial real estate brokerage Charles Dunn Co. Inc.’s Tri-Cities office, said that is a wise approach. “It sort of works itself out that the kind of tenants that want to be in a mall aren’t the kind of tenants that want to be on the street anyway,” he said. Boyd said typical asking rents for street retail in the area are between $3 and $3.50 a square foot on a net basis, but that these locations might be a little higher. “Because of the costs involved, rents may have to be in excess of $4,” he said, referring to expenses associated with purchasing the land and developing the site. Still, SiteWork’s Egelanian said the developer might find it challenging to get shoppers to go from the Americana to the added storefronts. “The challenge would be connecting the project in some way and getting shoppers to go from the Americana project to this adjacent project,” he said. “I’m sure they’re working hard on creating a successful flow for customers.” Historic value While the retail building will be new construction, the temple project involves a registered historic building. The Masonic Temple was designed by architect Arthur Lindley and erected in the late 1920s. It housed a number of Masonic organizations, but during the past several decades has remained mostly vacant, except for occupancy by small theater company A Noise Within that leased part of the space in 1992 before relocating to Pasadena in 2011. The creative-office rehab is expected to be completed in January, with CBRE taking the majority of the space. The commercial real estate services firm will relocate from its office in Universal Studio and occupy four floors, according to Liz Jaeger, senior vice president of public relations at Caruso. The conversion to creative office requires a commitment to restore the building to its former look, a condition of the purchase of the property. “Essentially, the whole façade is being rehabilitated to what it once looked like,” Caruso’s Krenzien said. “It has fallen into kind of a little bit of disrepair over the years, so we’re restoring all of the windows, replacing glass where it is needed, repairing and repainting frames of the windows, and putting back some of the grillwork that was lost.” CBRE will take the fifth through eighth floors of the temple; the first floor will include space for a restaurant. That said, there are concerns over parking for building employees and patrons who will frequent the additional retail locations along Brand. Caruso filed a parking exception with the city in September because its proposed retail project will not meet the minimum parking requirements. As required by the downtown specific plan, three parking spaces should accompany every 1,000 square feet of floor area. According to those standards, the new building should have 43 on-site parking spaces, instead it will have nine. Caruso’s application for exception was approved. “There has got to be a plan that addresses those parking issues, that retail has great traffic and great visibility,” Boyd said. “What I think is interesting about what Rick is doing is that no one can point to anything Rick hasn’t done well yet. You have a market that knows what he does will be a quality effort – but we just can’t figure out how it’s going to be parked.” In other news, Caruso Affiliated also plans to implement its corporate concierge service at the former temple building. The program offers around-the-clock personal assistance to employees with services including grocery shopping, car washes, refueling as well as dry cleaning and tailoring delivery and pickup. Caruso launched this program at its corporate offices in Los Angeles with more than 200 employees and has received positive feedback. “We are doing things like this to make the employees’ work life more productive,” said Julie Jauregui, senior general manager of the Americana. “We’re really excited about this marriage with CBRE. The full concierge staff will be located at the base level and the (employees) will be able to request these services via an app. It’s something that really is unprecedented in the office space.”

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