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Hotel Is Planned for Downtown Building

Real estate: It would be second financial district structure to be converted.

August 30, 2000|JESUS SANCHEZ | TIMES STAFF WRITER

A Manhattan Beach-based investment group is in escrow to buy a long-vacant office building in the heart of downtown Los Angeles' financial district and plans to renovate the structure into a 540-room hotel.

The former Sanwa Bank headquarters at Flower Street and Wilshire Boulevard would be the second empty downtown office building to be converted into a hotel if Columbia Development completes the acquisition of the 13-story structure.

The nearly 500,000-square-foot building sits across the street from the former Bank of California headquarters, which was purchased in January by Columbia Development in partnership with Standard Holdings, owner of the Chateau Marmont and the hip Standard hotel in West Hollywood. The bank building is being gutted as part of its transformation into a 200-room hotel aimed at young, affluent business travelers.

The addition of more than 700 rooms would be a substantial increase in the inventory of downtown hotel rooms. But industry analysts say the once-moribund downtown hotel market is in a good position to absorb the new guest rooms, with occupancy hovering around 70% after falling below below 50% in the early 1990s. In addition, the opening of Staples Center last fall has attracted the attention of hotel developers and operators, according to industry observers.

"It's a good time to pursue additional hotel development" in downtown Los Angeles, said Bruce Baltin, a hospitality industry specialist at PKF Consulting.

Mark Neumann, a partner in Columbia Development, did not reveal the purchase price. A partnership that included Beverly Hills-based Kennedy-Wilson Inc. bought the building in 1997 for $12 million. The sellers are asking $18 million, according to real estate information service CoStar Group Inc. The structure, which occupies almost half a city block, was built in 1949 and has been virtually vacant for about a decade.

"We're pretty confident it's going to happen," Neumann said. "We're trying to bring back life into the city."

Neumann said Standard Holdings is not involved in this deal. In contrast to Standard Holding's reputation for catering to a trendy and affluent crowd, Columbia Development will probably seek out a more conventional hotel operator for the larger property, he said.

The additional hotel is welcome news for downtown boosters eager to increase the number of visitors and amenities to the central city.

"Any kind of hotel or residential use would be perfect," said Cushman Realty broker Bill Puget.

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