An artist's rendering of AKA Beverly Hills. The property at 155 N.… (Korman Communities )
The Hollywood stalwart Musicians Institute College of Contemporary Music has expanded again with the purchase of two buildings on Highland Avenue.
The music school paid $6.2 million for two buildings totaling 18,662 square feet, real estate broker Kathleen Silver said. The property includes an office building at 1518 Highland Ave., a retail building next door at 1522 Highland Ave., a billboard and a parking lot.
Musicians Institute already occupies the two-story office building, which it has been leasing. The single-story retail building houses a high-end kitchen appliance showroom, but the school will take over the space when the tenant's lease expires in September.
The seller was a family trust headed by Charlotte Jones of Sherman Oaks, according to real estate data provider CoStar Group.
With this purchase, Musicians Institute now owns 10 buildings in Hollywood totaling about 130,000 square feet. Its main building on Hollywood Boulevard is open to students 24 hours a day and contains recording and performing facilities along with classrooms, practice rooms and a library.
"They have been doing a terrific job assembling property as close as possible to their headquarters," said Silver, president of Silver Commercial Inc. in Beverly Hills. "They buy one building at a time and keep plugging away."
The Highland Avenue property received multiple offers and the deal was done in three weeks, Silver said. Apartment developers are among the most aggressive buyers in Hollywood, she said.
Beverly Hills to get extended-stay hotel
Work is underway on an extended-stay hotel in the heart of Beverly Hills where guests must agree to pay a minimum of $12,000 to settle in.
The property now known as AKA Beverly Hills at 155 N. Crescent Drive is undergoing $10 million worth of renovations to prepare for an Oct. 1 opening. It's intended to serve travelers who will be in town for more than a few days but not long enough to justify leasing an apartment.
"Three or four months is the sweet spot," said Larry Korman, co-president of developer Korman Communities. Prices will start at $400 a night with a minimum one-month stay. The Pennsylvania developer bought the property for $85 million in January.
Completed in 2006, the property was intended to be an 88-unit apartment complex that included 12 two-story town houses. Later plans called for the units to be condominiums, but the housing crash brought an end to that notion, and Korman bought the complex after the lender foreclosed.
Korman is upgrading the lobby and adding a lounge, cafe, fitness center and outdoor space for residents' use.
There are AKA extended-stay hotels in New York, Philadelphia and Washington catering to affluent international leisure and business travelers and upscale consumers, Korman said.
Over the next three to five years, Korman Communities plans to add eight to 12 properties to the AKA portfolio in New York, Washington, Los Angeles and London, Korman said. The company, based near Philadelphia, plans to spend as much as $300 million in each market.
Korman's financial partners in Beverly Hills are BlackRock Realty Advisors and the California State Teachers' Retirement System.
Office market grabbing investors' interest
Investor interest in the nation's once-troubled office market is growing.
Although apartment buildings have been considered safe and desirable investments in recent years, many investors have been wary of buying offices because many white-collar companies were shrinking their staffs or packing more workers into smaller spaces.
As the U.S. economy improves, offices are again piquing investor interest, even in markets hard hit by the housing crisis and recession, said respondents to a quarterly poll by consulting firm PricewaterhouseCoopers.
"We are seeing the market begin to heat up a bit as interest rates remain low, and large amounts of equity look to be placed in desirable investment markets like Los Angeles," a participant said.
Buyers are aware, however, that the Southland office market is uneven, with some neighborhoods such as Santa Monica outperforming others.