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Developer Seeks to Bring Life Back to Galaxy

Real estate: CIM Group plans to renovate the 7-year-old center, joining a push to revive Hollywood Boulevard.

November 26, 1998|MELINDA FULMER | TIMES STAFF WRITER

Betting on a resurgence in the symbolic heart of the entertainment business, a Santa Monica-based partnership plans to purchase and resurrect Hollywood Galaxy, a failed retail and entertainment complex on Hollywood Boulevard.

The pending sale of the property reflects a rekindled interest in the streets of Hollywood. New development has begun to pull the famous district out of a long slump and attract new investment from real estate speculators and the industry.

CIM Group, a developer of retail shops in Old Pasadena and on Santa Monica's Third Street Promenade, has signed an agreement to purchase the mostly vacant property in partnership with Federal Realty Investment Trust of Maryland. The value of the deal was not disclosed, but real estate sources estimate it at more than $20 million--less than half of the $48 million it cost to build. The deal could close by the end of the year, Federal Realty officials said.

CIM plans to renovate the 7-year-old center, which now holds a six-screen General Cinemas theater and the Hollywood Entertainment Museum, to draw pedestrian traffic from such neighboring attractions as Mann's Chinese Theatre, Trizec-Hahn Corp.'s $300-million Hollywood & Highland development under construction, and the Walt Disney Co.'s El Capitan theater.

The stretch of Hollywood Boulevard between North La Brea Avenue and North Orange Drive is generating most of the heat.

"It's finally turning a corner. That whole end of the boulevard is becoming hot again as people realize that it's not all talk; there's action," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.

Both Federal and CIM officials declined to reveal their plans for the 150,000-square-foot center that opened to much fanfare in 1991.

Lender Citicorp foreclosed on the property in late 1995 after the center failed to attract shops and restaurants.

"We don't know what we're going to do with it until we sit down with some tenants," said Jan Sweetnam, Federal's director of acquisitions. "Obviously, it needs a lot of work."

The Galaxy is CIM Group's second Hollywood purchase in recent months.

It paid $14 million in October for a 12-story office building on the southeast corner of Hollywood and North Orange Drive, betting that new retail shops and restaurants would bring more entertainment industry workers back to the area.

"We think there are opportunities there that there haven't been in the past," CIM Vice President John Given said.

With a Disney store and new attractions at the nearby El Capitan, the Hollywood leg of the Metro Rail subway opening in May, and construction underway at several other sites, investors and developers are making the same bet.

"Prices are literally going up every day since the announcement of the Trizec-Hahn property and its groundbreaking ceremony" this fall, said John Tronson, a partner in Los Angeles-based brokerage Ramsey-Shilling Commercial.

Building owners who bought at the depths of the real estate market several years ago are now turning huge profits. Hollywood real estate investor Jeff Damavandi recently sold the 180,000-square-foot office and retail complex his family purchased at the corner of North La Brea Avenue and Hollywood to Kennedy-Wilson International for $18 million--about four times what his family paid for it.

"I'm advising buyers to hold on," Tronson says. "There's still a lot of room for [price] growth here."

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