The California Mart in downtown Los Angeles will be renamed California Market Center when the newest tenant at the giant wholesale showroom complex moves in next year, said mart owner Judah Hertz of Hertz Investment Group.
The new tenant is Britain-based DMG World Media, which recently signed a lease for 1.1 million square feet of showroom space at the California Mart complex at 9th and Los Angeles streets.
The name change, Hertz said, will reflect the switch to a broader range of industries at the mart, which historically has been a wholesale showroom for the fashion industry.
DMG, as reported earlier this month, plans to fill the space it has leased by subleasing to manufacturers and distributors of gifts and home accessories.
"We think the different types of tenants will work together very well," Hertz said. "Many apparel buyers buy gifts, and many gift buyers buy apparel, so there will be synergies between the two."
When the gift industry tenants move in, Hertz said, the California Mart will be more like the Dallas Market Center, which includes nearly 6.9 million square feet of showroom space serving a range of industries. The California Mart is a five-building, 3-million-square-foot complex with about 2 million square feet of showroom space.
Although DMG has agreed to lease 1.1 million square feet of the showroom space, the new tenant will start with about 500,000 square feet and gradually will expand, said Jonathan Larsen, a broker with Trammell Crow Co. who represented DMG in lease negotiations.
Eventually, the lease calls for DMG to lease about 500,000 square feet in each of two California Mart buildings and 100,000 square feet in a third building, Larsen said.
About 650,000 square feet of the mart's space is empty now, according to Hertz, who said the additional space called for in the lease is expected to become available over the next few years as the leases of current tenants expire.
Terms of the lease were not disclosed, but it is believed to be a 20-year deal worth more than $300 million. Dallas Market Center will manage the space for DMG, which owns the right to the twice yearly California Gift Show that is held at the Los Angeles Convention Center and managed for DMG by George Little Management of White Plains, N.Y.
Thanks to the DMG lease, "This is the first time in maybe 20 years that the California Mart will be fully leased," Hertz said. He echoed the comments of Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., who said a filled-to-capacity California Mart will boost the downtown economy by making Los Angeles a more important showroom center and by increasing hotel occupancy.
The new lease also tightens the downtown office market, noted Larsen, who said the California Mart for a while was thinking of marketing itself to general office users to fill its long-vacant space. He said Los Angeles Unified School District considered the mart before deciding to sublease 700,000 square feet from Bank of America.
Mart space is not usually included in the downtown office inventory, but Cal Mart became a factor when it was marketing to general office users, Larsen noted.
"This is going to tighten up the [office space] alternatives for large tenants," Larsen said. "There is not a lot of large, relatively moderate-priced space left now."