Click here for 2008 Map of Hollywood Economic Development Update

Economic Doldrums Do Not Dampen Enthusiasm for Hollywood’s Future
Members Cautiously Optimistic About 2008
Hollywood Chamber asked... What is the outlook for your business in 2008?
Can L.A. Become A Business-Friendly City?
Hollywood Chamber asked... What could the City of L.A. do to be more business friendly?
2007 Summit Speakers Forecast Bright Future on Sunset
Will the good times in real estate keep rolling in Hollywood?
Viscuso Represents New Wave of Hollywood Investors
Eric Garcetti: Hollywood and the Future of Los Angeles
Business Improvement Districts Set the Pace in Improving Hollywood
Hollywood Enterprise Zone Creates Business Opportunities
Chamber Champions Park Project… On Top of the Freeway!
How will the Central Park Freeway Project Benefit Hollywood?
New Business Improvement District Begins on Sunset and Vine
Construction to Begin on $500-Million Project
What will the Hollywood & Vine Project Mean for Hollywood?

Economy May Delay Some Projects
Economic Doldrums Do Not Dampen Enthusiasm for Hollywood’s Future

Despite an economic climate that is causing fits for real estate throughout Southern California and rest of the nation, there remains a deep sense of confidence for the future of Hollywood.

At the 14th annual Hollywood Economic Development Summit held last month at the Arclight Cinemas, nearly 400 attendees heard positive predictions about the future of the entertainment capital. This year’s summit focused on “taking Hollywood to the next level” and emphasized infill developments planned along the Selma Avenue corridor. Attendees heard from a panel of experts discussing new retail (Whole Foods Market and Urban Outfitters), new office space (Brentwood Capital) and new mixed-use development (NCA). In addition, a proposed hotel and upgrade of a tired alley were discussed by the developers of the Selma Avenue Hotel. A special Visionary Award was presented to James M. Nederlander, long-time investor in Hollywood and owner of the Pantages Theatre.

The Chamber asked some of the real estate experts in the area for their assessment on how Hollywood is faring compared to other L.A. submarkets and what the future holds. Nicole Mihalka of DAUM Commercial Real Estate said that she was encouraged by the information presented at the Summit. “It is nice to see developers who believe in Hollywood despite the economy,” said Mihalka. “Hollywood is particularly strong in the retail and hospitality sectors. I’ve noticed in my own work that retailers don’t seem to be discouraged by the economy and hotel groups are still interested in Hollywood.”

Shiva Monify of Sperry Van Ness agreed that Hollywood’s retail properties were maintaining their prices. “There is still a very high demand to buy retail strip centers in Hollywood,” she noted. “Actually, people are now moving toward East Hollywood, Los Feliz and Silver Lake. What is happening in Hollywood is impacting prices there.”

Marty Shelton of NAI Capital Commercial cautioned that retail is doing well in Hollywood but that location is key. “There are ‘dead zones’ without foot traffic that are hard to lease,” he stated. “In high traffic areas, you can get up to $7 a square foot, but in more marginal areas, lessors are more likely to get $3 to $4 a square foot.”

Developer George Abou-Daoud, who opened The Bowery and Delancey restaurants, offered his appraisal: “The developers who secured their equity and debt early are tied in and committed to completion. Everyone else will be forced economically to reduce the size of their projects based on where they can go with the dollars. I don’t think that some projects won’t happen as much as they will be scaled back as needed. Debt is tight, and that immediately makes the cost of capital higher.”

Jeffrey Schick of First American Title agreed. “The very good-to-great projects underway now or which soon will be, will achieve success and possibly be quite successful,” he analyzed. “Projects that are not underway or which don’t have their entitlements or financing may take a little longer and may have to wait until the next upward real estate cycle.”

“If every developer thinks through their projects in terms of controlled size and market needs, we’ll be fine,” added Abou-Daoud. “We will definitely weather the downturn better than other parts of the City.”

Shelton noted that it is very difficult to get financing for condominium projects at the moment, but that apartment construction is still possible. “The rental numbers you have to get to justify new apartment construction are in the $2.40 to $2.50-a-square foot range,” he offered. “This is a reasonable number to get in Hollywood, compared to other areas, which should allow apartment projects to still go forward.”

Hollywood also has a brighter outlook for office development. Martin McDermott of Grubb & Ellis, put it this way:  “Compared to other submarkets including Beverly Hills, Santa Monica and Century City, Hollywood will perform better than the general economy and those submarkets. Since Hollywood lease rates were suppressed for so long, they have a lot more room to rise. Hollywood has just started to see the run-up in value. When coupled with the development boom, location, and a world-famous name, you have a lot more stability, which will translate into higher rates.” He also noted that unlike its competitors, Hollywood is not as institutionally owned, and so local owners will have more creative flexibility in meeting the needs of tenants.

Shelton said he believed office rental rates on the Westside are going to plateau and probably fall back.  In Hollywood, because it had so much catching up to do, he doesn’t believe rates will drop off, although they may plateau for a while.

Brian Folb of Paramount Contractors, said he agreed with the sentiments voiced at the Summit. “I think the opportunities in Hollywood are as good or better than most other areas due to the critical changes and progress that have already occurred.  However, there is no substitute for a viable and well-researched business plan. Like Thaddeus H. Smith said at the Summit, ‘If you know what you are doing, you will succeed.’”

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Members Cautiously Optimistic About 2008
Forecast on Real Estate, Entertainment Industry, Retail Sales, Hospitality and Healthcare Industry... Read what Hollywood businesses are saying about 2008

A survey of Hollywood Chamber members representing a cross-section of the community’s major industries shows cautious optimism for the Hollywood economy in 2008, despite some potential clouds on the horizon with the real estate downturn and strikes in the entertainment industry.

Construction cranes on Hollywood’s skyline point to the investment pouring into the community. Current indications are that the three major developments that plan 2008 groundbreakings are still on track.

The Clarett Group’s $400-million Boulevard 6200 project is expected to break ground in January on its first phase on the block on the north side of Hollywood Blvd. east of the Pantages Theatre. With 1,000 apartments planned and 175,000-sq.ft. of retail space, the Clarett Group anticipates a continuing strong real estate market for rentals.

Of greater concern has been Gerding Edlen’s Sunset & Gordon project on the site of the Old Spaghetti Factory with 311 condos, 40,000-sq.ft. of office space, and 13,500-sq.ft. of retail. Brent Gaulke of Gerding Edlen said his firm expects to break ground between April and June, depending on the timing of final City approvals. “The market definitely has changed, but we feel good about our product positioning and the mix of uses, and fortunately our lenders share these same thoughts,” offered Gaulke.

Camden Development’s mixed-use project at the corner of Vine and Selma, with 311 apartments and a 67,500-sq.ft. Whole Foods Market also appears to remain on track for a ground breaking in the second half of the year.

Rick Holcomb of Camden reported that construction drawings were submitted in December to the City. “There have been definite impacts to the real estate market,” he said, “but as a REIT and with our own capital sources, we have not suffered from the credit crunch as much as our competitors who need to obtain financing have been.”

Real Estate Forecast
Steve Tronson of Ramsey-Shilling Commercial Real Estate noted, “Due to the momentum achieved over the last five years or so, Hollywood has a deeper reservoir of desirability and durability than most of the other submarkets in L.A. Assuming the strike is not of significant length, the Hollywood real estate market should remain stable for 2008.”

Tronson said that Hollywood remains desirable to investors and to businesses because of its low seven percent office vacancy factor. Although property values have leveled off, they haven’t declined significantly in Hollywood. Depending on the impact of residential foreclosures, he saw possible slight reductions in property value reductions in 2008, but did not anticipate significant decreases in Hollywood real estate.

Where he did see declines was in the construction of residential condominiums. “Residential financing for the development of condos has dried up, so new construction of these units will be radically reduced,” he predicted. He also saw a slowdown in leasing and sales in the commercial sector if the Writers strike extends into 2008.

Jeffrey Schick of First American Title Insurance believed that the new year would bring continued strong investment and development in Hollywood. “It may fall off slightly from the great pace and volume of last year, but should still be one of the strongest spots in the country,” he explained. “Some of the projects will morph. Certainly the capital sources and ratios will have to adapt to the continuing credit dislocations. More equity from domestic and foreign sources will be needed as less debt and mezzanine dollars per cost will be funded. Though some changes are inevitable, I believe the future is bright for Hollywood’s economic development.”

Entertainment Industry
The many small businesses in Hollywood that are associated with the entertainment industry as well as those that provide ancillary services to the industry could face significant problems due to a lengthy Writers strike followed by a possible Screen Actors strike midyear.

David Phelps of the Association of Independent Commercial Producers (AICP) reported that advertisers have already begun to pull advertising dollars from networks weak in non-scripted programming. “Should the strike continue into 2008 – a likely scenario – the industry will feel the economic effects with a dramatic drop in new programming and lower viewership,” he explained.

Fred Rheinstein of The Production Group, a long-time Hollywood player in the entertainment industry, agreed that the strike could be devastating for the post production industry. “We are a small video stage,” he noted. “For the overall economy, I think it is going to be really tough. This strike could last months and have a serious impact on our industry. The impact may be even worse than in 1988, the last time there was a long strike.”

Retail Sales
Don Robertson of Honda of Hollywood said that from an automotive perspective, everything points to a flat year in 2008. “We may be able to squeeze a little growth because we have a good business plan,” he thought. He noted that 2007 was a tough year overall for the auto industry.

“So far, we haven’t noticed much of an impact from the strike, but if it goes on much longer, then we will start to see the affect,” he predicted. However, if there were to be a slowdown in new auto sales, he said there would be a corresponding increase in maintenance and auto servicing because people hold onto older vehicles longer.

Cindy Chong, the general manager of Hollywood & Highland, was more optimistic. “Hollywood & Highland has just completed a great year,” she reported. “We have had double-digit increases the past two years. I think the dynamics here are so unusual compared to a traditional retail center that it gives us the opportunity to leverage opportunities more than others.”

She said thought there would be shifts in the business to be considered in 2008, but that the dynamics of their business would still allow for continued growth in the new year.

Hospitality Industry
“With all of the new product in the area as well as refurbishments, we’re fairly bullish from a rate standpoint, but could possibly see some erosion from an occupancy standpoint,” said Bruce Gorelick, general manager of the Renaissance Hollywood Hotel.

He noted that both the Belage and LeMeridian Hotels would be coming back into the market in the first quarter after extensive renovations this past year. Together, they add back 500 rooms into the greater Hollywood marketplace.

Gorelick also saw the uncertainty from the Writers strike filtering into the first quarter. He noted that his hotel had already seen several large cancellations from entertainment-related firms that were in one way or other related directly to the strike.

Healthcare
Mark Costa, executive director of Kaiser Permanente’s L.A. Medical Center in Hollywood, said that the big issue affecting his industry is whether there will be comprehensive healthcare reform passed in Sacramento. He noted that with cost pressures on healthcare benefits, there is a risk of less people being insured if the State does not act.

He anticipated that employment at his facility would stay pretty flat through most of 2008. However, Kaiser’s new Hollywood hospital will be finished later in 2008, with occupancy in 2009. He said that Kaiser may be adding some personnel in late 08 or early 09 to help manage the larger facility.

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Hollywood Chamber asked...
What is the outlook for your business in the coming year?
Any worries about the economy/ongoing and potential strikes...

Though the trickle-down effect of the current writers’ strike and possible future industry strikes affect us as a bank by reduced deposits and the reduced ability to pay on outstanding credit from these individuals, it pales in comparison to the effect it has on the numerous families of these individuals receiving diminished income, especially during this holiday season.  For their sake, we hope all of the differences between the strike’s concerned parties are settled quickly and an affable resolution is agreed upon. Sholeh Assil, V.P./ Branch Manager, California National Bank

The 2008 Outlook for Hollywood will remain extremely positive. Everyone wants to live, work and be entertained in Hollywood. Although the ongoing strike may cause a temporary setback, it cannot derail the continuing rebirth of Hollywood. There are many new and vibrant residential, commercial and entertainment projects coming out of the ground which will further to enhance the vitality of the Hollywood lifestyle. Hollywood, as a real place, now matches its exciting image. Ira J. Dankberg, A.I.A., Project/Construction Manager, Bond Companies

We’ve been seeing some impact in terms of business that has disappeared - at least temporarily. It’s unfortunate that there’s no resolution so far to this strike. The lack of ability or intent to resolve important issues like this has a tremendous negative impact on the economy and the future of the economy. Even after they are resolved, we continue to an ongoing impact from. Businesses move or decide to do business elsewhere. Hollywood can ill afford to further turn off investors and give people reasons to do their production elsewhere. All issues aside and assuming resolutions to important issues I believe Hollywood has a very positive outlook for 2008. There’s a lot of growth and improvement and we’ll continue to see more businesses moving to Hollywood. Bob Gerholdt, General Manager, Copymat

Anytime there’s a strike, we’re affected by it. We’re in the catering industry and we do a lot of business with the entertainment industry. We do a lot of gift baskets and entertainment events and we’ve noticed a decline on orders from these businesses. Although we’re seeing an increase in other types of sales, we hope that the strikes ends quickly because we’re missing these folks. Hollywood is a great town and we’re encouraged by what our customers tell us about the ongoing changes in the area. As the strike ends and the economy rebounds, Hollywood promises to be a great town in the near future. Rob Hunt, Store Director, Bristol Farms

The coming year has many challenges for the tourism and business industries. Net income is down as fuel costs are rising at an unprecedented rate. The limousine/transportation business will feel the effect as trips to and from the airport and business trips are curtailed. Travelers with expense accounts may still travel, however that may be just not as frequently. Convention business may be the one saving grace. LA Inc., the major hotels and the Nokia Theatre will continue to bring conventions to the city which hopefully will help offset the loss of tourism dollars. Avi Karpel, President, A List Limousine Service

The demand for commercial loans remains strong in all categories of real estate so I feel very good about 2008. Los Angeles is one of the few bright spots for investment in the view of national money managers because we are the gateway to the orient and have a diverse and stable economy. Thanks to the efforts of the chamber and others, most industry observers believe the Hollywood submarket leads the market in the rush to urban infill and will benefit the most from this powerful movement.  Don Scott, Senior Vice President, First Financial Bancorp

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Can L.A. Become A Business-Friendly City?
Hollywood’s own City Council President Eric Garcetti has introduced some initiatives that just might put L.A. in the competition in future years

When it comes to the annual list of most business-friendly cities in the county, Los Angeles is a perennial “also-ran” – rating at the bottom of the list along with Santa Monica and Beverly Hills. Now, in a flurry of activity not seen in recent memory, Hollywood’s own City Council President Eric Garcetti has introduced some initiatives that just might put L.A. in the competition in future years – if the City follows through.

Garcetti announced last month that he was creating a new business and jobs-oriented committee and was championing a “12 to 2” Development Reform proposal to reduce the number of city agencies that developers must deal with to secure approvals for their projects.

“I have worked in the City of Los Angeles for 27 years and this is some of the most encouraging news that I have heard,” said Hollywood Chamber President and CEO Leron Gubler, who also serves on the City’s Business Attraction and Retention Task Force, as the representative for the 13th Council District. “In the past, most Los Angeles officials did not seem concerned that the City was not competitive with other jurisdictions.”

“The new Jobs, Business Growth, and Tax Reform Committee will help the City Council focus better on how to stimulate our economy through workforce education and training, tax reform and business development initiatives to create even more opportunities for Los Angeles families,” explained Garcetti. “This is the first time that the council has had one committee to review all economic development initiatives.

Garcetti has appointed Councilman Greig Smith as chair of the new committee, with councilmembers Herb Wesson and Wendy Greuel rounding out the committee.

The council president also explained that his “12 to 2” initiative would help developers cut through the red tape. The idea is to assign a Case Planner to each project early in the process, who would see it through to the end and who would be the liaison to all 12 city departments.

“We want to create a system in which developers get feedback from the City Planning Department in the early stages of their project so that they understand what the community plan and local zoning regulations require,” noted Garcetti.

“We have created a working group of developers, architects, business organizations, urban planners, city leaders and others who are figuring out the details. We still have a way to go before we can make this happen, but I am confident that this group will develop an innovative proposal.”

The most significant recent victory for the business community occurred three years ago, when the City Council passed comprehensive business tax reform after eight years of effort. The reforms, which took effect in January 2006, promised to roll back business gross receipts taxes for all businesses by a minimum of 15 percent spread over a five-year period. So far, the tax reductions have occurred annually as promised. Since that action, however, the business community has had little to cheer about, as renovations to LAX became bogged down, and ordinances were passed that intruded into private sector decisions by requiring airport area hotels to pay a “living wage” to their employees, and directing grocery stores to retain workers for 90 days after a change of ownership. Both actions have been challenged in court.

“The success of business tax reform will hopefully pave the way for this new committee to recommend further cuts in the gross receipts tax,” commented Gubler. “When the Council approved the reductions, we told them that the City’s receipts would actually go up, and that is exactly what happened. Even with the reductions though, the gross receipts tax is still burdensome for businesses.”

Gubler suggested that other initiatives that the new City committee might pursue include creating a Los Angeles Entertainment Technology Development Zone, restructuring the L.A. Business Team to more effectively pursue possible growth sectors for the City, and to improve workforce training.

Can the City of Los Angeles really become business friendly? Garcetti believes so. “If we want to ensure that Angelinos have access to good jobs, then we have to make our city a more attractive place to do business,” he emphasized. “We have a lot of room to improve.” He said he believed improvements such as business tax reform, efforts to stop runaway production, infrastructure investments, and streamlined access to city services that would directly help the bottom lines of local businesses were all possible.

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Hollywood Chamber asked...
What could the City of Los Angeles do to be more business friendly?

Within Los Angeles County, cities such as Santa Monica, Culver City, West Hollywood and Beverly Hills have all provided the City cores with publicly/ privately funded parking structures. In order for most small to medium offices and retail/ restaurant businesses ‘to do better’ in Los Angeles, the City needs to look at this issue. The City is not as small and compact as the prior ones mentioned, but there are pockets or districts that require more attention. With limited means of variable metro transportation (the underground Metro is very limited in its scope) the automobile remains the primary access means to work and pleasure. Limited land for parking affects LA’s city cores and higher density districts when it becomes an issue to park nearby. The other larger issue affecting all of us is the heavy cost of doing business in LA, from taxes to permits to redtape. George Abou-Daoud, Entertainment Developer, The Bowery

Traffic is bad and the cost of living is high here. The public transportation system needs to be more accessible, especially from West L.A. Tax incentives need to be part of the formula if the objective is to attract large corporations. This would include affordable housing packages for their employees in close proximity to the office headquarters or at least near metro rail portals within one or two stops so they don’t have to drive and pay for parking. The city also needs to advertise that we are business friendly. I’m not just talking about a small ad in the LA Business Journal. It needs to be a major worldwide campaign including prime time television, bill boards, super-graphics, Internet, etc. They need to show how we have the ideal business environment and then plaster it all over the world. We have the best weather in the world. Under the right conditions, Los Angeles should be anyone’s first choice to house their business. We’re spoiled. We’ve pushed good businesses out of the city. We need to become hungry again. Brian Folb, Executive Vice President, Paramount Contractors & Developers

Lobbying for control of our runaway litigation for everything, ie., Wage and Hour lawsuits, ADA lawsuits, Worker’s Comp lawsuits, would help keep businesses in California.  Los Angeles is the spot where many great ideas germinate and then take hold.  Let’s lead California on mitigating these ridiculous lawsuits. Control homelessness! Carol Massie, Owner, Operator, McDonald’s

I believe that the City of Los Angeles could be more business friendly if they made it easier to report and file the City’s Business Tax under the single category reporting rather than breaking up a single business into departments.  Breaking up a single business into departments negates the benefit of single category reporting. Patricia Robertson, Owner, Honda of Hollywood

The City can simplify the building permit process to allow a business to modify a building to better suit its needs.  There can be a contact in the Building & Safety Dept who can be the liaison and work on behalf of businesses to ensure that the permits are issued in an expedited way. Fred Rosenthal, V.P. & Owner, Ametron Audio / Video

Both the City of Los Angeles and its residents would be well served by reforming the cumbersome development approval and permit process.  Today’s disjointed and divisionally territorial system consumes enormous amounts of time and wastes valuable resources.  These inefficiencies often result in scaled back visions and missed opportunities.  Citizens and business owners have been demanding reform for years, let’s get it done! M.D. Sam Smith, CFP, Principal, Genesis/Smith-Benton Insurance & Financial Service

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2007 Summit Speakers Forecast Bright Future on Sunset
The next step will be to tie all these projects together and
create a very compelling neighborhood

The 2007 Hollywood Economic Development Summit is history, but the talk continues about how Sunset Blvd. is helping to shape the future of our city.  By any measure, it was a record-setting summit.  For the second year in a row, the summit was a sellout, even though it was moved to a venue larger by a third than last year – Arclight Hollywood.  With more than 400 attendees, it was also the best attended summit, since the Hollywood Chamber of Commerce began the program 13 years ago.

The conference opened with the “world premiere” of a video highlighting the history of Sunset Blvd. by juxtaposing proposed new developments against the historic uses of the associated properties.  The video was created by Chamber volunteers Laurie Goldman, Dave Gajda, and Tony Michelman, with assistance of The New Post Group and Theatre of Note.

“Sunset Blvd. is going to reclaim its prominence as an anchor for the entertainment industry,” predicted CRA/LA’s Cecilia Estolano.  “This is a growth sector for L.A. and the foundations of this growth sector are right here.  Sunset Blvd. will be the next big thing in L.A. and Hollywood.”

“It is great to think big again,” contributed L.A. City Council President Eric Garcetti. “We are now seeing the emergence of a Hollywood where everything will be close at hand.”

The Council President noted that developers have been willing to work with the community to create a wonderful vision of what the City should be.  “We’ve shown the way, but it is a fragile thing that requires constant work,” he stressed.

Developers also piped in with their analysis of Sunset.  Tom Cody of Gerding Edlen said “Sunset vies with Wilshire as the most important streets in the City.  Sunset is the backbone, while Hollywood Blvd. is where people go to be seen in Hollywood,” he noted.  “The next step will be to tie all these projects together and create a very compelling neighborhood.”

Mark Cassidy of Molasky Pacific, whose company is redeveloping Columbia Square with an $850-million project, said, “We think Sunset will be the business address, and we think there will be a giant resurgence of business activity along the Boulevard.”

Keynote speaker at the conference was L.A. City Director of Planning Gail Goldberg.  “I think of Hollywood as our ‘more so’ community.  It has everything, only ‘more so’ than any other place,” she explained, pointing to iconic buildings and famous streets.  “We are on our way to making them fabulous streets,” Goldberg said, “worthy of their place in the world.  When we begin to add all the amenities, it will be fabulous.”

She noted that people are coming back to Hollywood and jobs are returning.  “It is a wonderful 24-hour urban experience that sets the stage for the rest of the City.  You can show this City what a wonderful, urban experience can be like.  Keep on dreaming, because this is Hollywood,” she concluded.

The conference was co-chaired by Brian Folb of Paramount Contractors and Ira Dankberg of Bond Capital.

The Chamber appreciates the many sponsors who made the summit possible.  Diamond Level Presenting Sponsors included:  Apollo Real Estate Advisors, CIM Group, CRA/LA, Gerding Edlen, Newport Capital Advisors and Ramsey-Shilling Commercial Real Estate.  Gold Level Sponsors were: Bond Capital, the Clarett Group, Gatehouse Capital, Kaiser Permanente, KOR Development, Legacy Partners, Metro Modern Developers, Paramount Contractors, and Windermere Properties. 

Silver Level Sponsors included: 5+Design, Alliance Residential, Briggs Law, Capital Credits Consulting, DCA Civil Engineering Group, First American Title, First Financial Bancorp., Grubb & Ellis, GVA DAUM Commercial Real Estate, Handelman Consulting, Jeff, Mangels, Butler & Marmaro LLP, John Laing Homes Urban, NAI Capital Commercial Palisades Development Group, Second Street Ventures, TV Guide/Gemstar, ULI Los Angeles, and Van Wagner Outdoor.

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‘Will the good times in real estate keep rolling in Hollywood?’
Hollywood Chamber asked industry leaders

Right now demand far exceeds supply for commercial/industrial properties in Hollywood. Some land sales have exceeded $400.00 per square foot. Two years ago this would have been unthinkable. Rents are soaring. I think Hollywood will start to look like West Los Angeles over the next ten years with multiple class A high rise office towers. If you want to make money in Real Estate, buy Hollywood!
Jeff Luster, CEO, Major Properties

Hollywood’s brand is not fully capitalized. Businesses are now relocating to Hollywood over Beverly Hills, Santa Monica, Century City, and West Los Angeles to take advantage of the buzz, not the discounted rents. Retailers are looking to Hollywood for flagship locations. Renters are choosing Hollywood for the complete live, work, play lifestyle. This repositioning of Hollywood will continue to drive rents and stability for years to come.
Martin J. McDermott, CCIM, Grubb & Ellis

Absolutely. Hollywood has long been an internationally coveted brand in the world of entertainment and pop culture, and now the same can be said for Hollywood real estate. Developers, investors, and tenants are all clamoring to be a part of Hollywood’s exciting next phase. We have only just seen the beginning of Hollywood’s potential.
Nicole Mihalka, Vice President,
GVA DAUM Commercial Real Estate

The Hollywood investment market has been very strong over the last few years and it will continue to be one of the most attractive markets for investments in Southern California. A growing office shortage in Hollywood has prompted some landowners to consider building new space. The demand from national and regional tenants is coming to Hollywood, making the rental market more attractive than ever. State tax credits and CRA have had a significant impact on this historic resurgence and will continue in the future.
Shiva Monify, Sperry Van Ness Commercial Real Estate Company

“Hollywood’s future is bright indeed. With substantial commitment to this submarket from the investment and development communities, Hollywood is positioned to build thousands of residential units, vastly improve its retail tenant base, and with enough momentum that I believe will occur, the office sector will see its first new substantial developments in decades. The strength and commitment of this investor/development group, along with strong political will, should see Hollywood stay hot.”
Steven P. Tronson, VP,  Ramsey Shillling Commercial Real Estate

Hollywood has always been tremendously rich with potential and I believe that Hollywood is in the very early stages of realizing its enormous potential. Hollywood is about as central a location as possible in the greater Los Angeles area and it has always been the physical and spiritual center of the entertainment industry. Also, Hollywood is blessed with strong interest from innovative and entrepreneurial developers coupled with strong leadership from the business community led by the Hollywood Chamber of Commerce, a supportive Community Redevelopment Agency and strong City Council office support. These are key ingredients for a strong Hollywood real estate market. Hollywood has unlimited potential and looks to be a dynamic place to live, work and play for the foreseeable future.
Rob Waller, Senior Vice President CB Richard Ellis, Brokerage Services

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Viscuso Represents New Wave of Hollywood Investors

Mike Viscuso tells how he was invited seven years ago to drive up from San Diego to consider investing in Hollywood and was not impressed.  In fact, as he surveyed the area, he was afraid he was “going to get rolled”.  Today, he is investing $125-million in the revitalization of Hollywood.

Viscuso, the CEO of Visco Entertainment, said that although the area at the time was scary with a lot of transients, he could see the potential.  He had experienced the renaissance of the Gas Lamp Quarter in San Diego, and likened the condition in Hollywood to how it had been 10 years before in that area.  “I knew the potential was there,” he explained.

It took him five years to find the right location in the middle section of Hollywood Blvd.  He purchased three buildings and a warehouse that had previously belonged to Frederick’s of Hollywood.  The warehouse has been leveled to provide 115 parking spaces and renovation of the Frederick’s building is fully underway for an anticipated opening in the fourth quarter of this year.  Plans call for a dining and entertainment venue with different concepts on each of the four floors and rooftop, to include a restaurant, club lounge, banquet facilities, and a rooftop patio.  He is spending $25-million on phase one.

His vision for phase two includes a 225-room condo hotel that would be built in the rear, on top of a 500-car parking garage and which would connect to the phase one project, that will be the dining and entertainment venue for the hotel.  He is now in the entitlement phase for phase two.

“This project will be entirely self-sufficient,” Viscuso stressed.  “We will create the synergy that will bring people into the center area of the Boulevard.  I don’t cut corners.  This will be a unique, fun space that will accommodate people in the community – both the old residents as well as the new ones moving in.”

Viscuso said he admired what the CIM Group has been doing along the Boulevard and hopes to revitalize his section of Hollywood Blvd. in an even grander way.

A native of Pittsfield, Mass., he moved to Texas in the 1970s, where he became regional director of food and beverage for Westin Hotels.  He later switched to McFadden Properties, where he developed new concepts for restaurants and clubs.  In 1985, he went out on his own and opened a dinner theatre. 

In 1991, he moved to San Diego and opened E Street Alley, in the Gaslamp Quarter, which at the time was a questionable area.  He later took over the Old Bank Building in San Diego and created the successful On Broadway Events Center.  In addition to San Diego, he has also invested in restaurants in Long Beach and Pasadena.

As a developer, he is excited by what he sees in Hollywood, and thinks the community will be very different in another three to five years.  “Every amenity a resident needs will be available within a five to six block radius,” he commented.  “It will really be like areas of Manhattan, such as Times Square.”

Viscuso looks forward to being part of the new energy that is sweeping Hollywood and is moving his offices to the new development.

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Business Improvement Districts Set the Pace in Improving Hollywood
The original Hollywood Entertainment District tripled in size and three additional BIDs
have been created – two of which go into effect this year.

What began as an experiment 10 years ago in creating a business improvement district (BID) in Hollywood has become the premiere example of a success story. In the intervening decade, the original Hollywood Entertainment District tripled in size and three additional BIDs have been created – two of which go into effect this year. The Hollywood Chamber of Commerce has been a strong proponent of creating the BIDs.

“When the Chamber was involved in creating the first BID, it was with the intent of showing that the local business owners were willing to invest in this community,” said Chamber President & CEO Leron Gubler. “At the time, the revitalization effort was stalled and the news media was saying that Hollywood couldn’t get its act together. We had to prove them wrong.”

The Hollywood Entertainment District (HED) originally stretched along Hollywood Blvd. between LaBrea Ave. and McCadden Place and had an initial budget of $600,000 a year. When it began operation in 1997, it placed its emphasis on security and cleaning programs. It was the first BID to initiate armed security patrols. As a result, there was a dramatic drop in crime, and strong support to expand the district east. Today, the district reaches to Gower Street on the east and has an annual budget exceeding $2.2-million.

“When looking at fiscal figures within the HED, we find that since 1998, assessed property values have increased by 82 percent, transient occupancy tax revenue has increased by 148 percent, parking tax revenue has increased by 271 percent, and utility tax revenue has increased by 371 percent,” expressed Kerry Morrison, executive director of the HED since its formation. “These are astounding numbers when compared to L.A. as a whole and are one of the indicators of the success of our revitalization efforts.”

Following the success of the HED, an effort was mounted to create a BID in the industrial area of Hollywood. That district, now known as the Hollywood Media District BID, encompasses Highland Avenue between Fountain and Melrose and Santa Monica Blvd. between La Brea Ave. and Vine Street, with some adjacent side streets. It has a budget exceeding $1-million annually.

Among its accomplishments has been the beautification of the area, with a major streetscape improvement program along Highland Ave. and a gateway sign. Following the leadership of the HED, the Media BID has installed five security cameras throughout the district.

Devin Strecker, operations coordinator for the Media BID since 2001, is justifiably proud of their accomplishments. “The medians are very exciting, and will make a dramatic difference when completed,” he commented. “I feel we are playing an important role in the revitalization of Hollywood.”

Of the two new BIDs that have formed, the Sunset & Vine BID was the first out of the chute. Winning the support of 60.5 percent of property owners in the City-conducted election, it became effective last November, and has negotiated an agreement with the HED for shared services, in order to get security patrols and cleaning programs underway sooner.

The district extends along Sunset Blvd. from the Hollywood Freeway west to Cassil Place and Seward Street, and on Vine Street between Selma Ave. and La Mirada Ave. It has an annual operating budget of $1.23-million.

Dirk Degraeve of Paramount Developers and Contractors, who was president of the formation group, described the BID formation as a “fantastic achievement.” “Our vision is that five years from now, the area that is included in the Sunset & Vine BID will be L.A.’s newest vibrant community,” he said. “It will be a new and fresh urban neighborhood for people to live and work and visitors to enjoy. Our job will be to help guide that vision.”

The final new BID is the East Hollywood BID that the Chamber has championed for the past six years. The district extends along Vermont Ave. from the Hollywood Freeway north, wrapping around Barnsdall Park, and then east on Sunset Blvd. to Hollywood Blvd. The smallest of the BIDs, with a budget of $90,000 a year, it will concentrate on cleaning and maintenance programs.

There were numerous challenges that the Chamber faced in building a consensus to form the district in an area where there was not a strong grassroots business community. In the end though, the district was approved with more than 85 percent support of property owners.

One strong proponent of the district was Jeff Zarrinnam, owner of the Ramada Hollywood Hotel. He noted that while his guests like his hotel, they often complain about the appearance of the neighborhood. He believes that a unified effort by the East Hollywood BID will make a difference in streetscape, cleaning and marketing efforts. He also said that legislators are more likely to listen to property owners if they are unified and continue to have the clout of the Hollywood Chamber of Commerce. The Chamber has agreed to assist in the management of the East Hollywood BID.

A Sampling of BID Accomplishments
Hollywood Entertainment District:

• Dramatic drop in crime throughout the district

• Sidewalks cleaned on a daily basis

• Successfully fought to ban Silly String on Halloween and to control the proliferation of news racks.

• Removed ficus trees that were damaging sidewalks and replaced with more than 100 new trees, including Queen Palms, Canary Island Palms, Jacarandas, and Mexican Fan Palms.

• Purchased nine surveillance cameras for LAPD to monitor activities within the district.

Hollywood Media BID:

• Promoted Theatre Row

• Improved security and cleanliness throughout the district

• Purchased five surveillance cameras for LAPD to monitor activities within the district.

• Secured a new traffic signal on Highland at Lexington

• Landscaped Highland Avenue with six “media islands” featuring palm trees, Chinese Pistache, Tipu and Purple Leaf Plums, and installed a Melrose Gateway Sign to the district.

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Tax Credit Seminar: Hollywood Enterprise Zone Creates Business Opportunities
Discover how you could save your business thousands of dollars

Are you in the Zone? View map

A new State Enterprise Zone that was approved in December 2006 for Hollywood is offering some great opportunities to Hollywood businesses. Enterprise Zones are incentives designed to stimulate growth and development in select areas.  By far the most lucrative tax credit available through the program is the hiring tax credit, which allows an employer to take credits of up to $35,100 per “qualified” employee, based on wages over a five-year period. Other benefits available include net operating loss carry forward, net interest deductions, and sales or use tax credit for the purchase of “qualifying” machinery and parts.  For further information, call (213)744-7111 or visit  www.lacity.org/cdd/business. 

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Chamber Champions Park Project…
On Top of the 101 Freeway!
$100,000 in Park Funding Expected to Go to Council Vote in January
& State-of-the-Art Assistance Pledged by SCAG

Over the years, people have come to Chamber and remarked that something had to be done about the park shortage in Hollywood.  However, with raw land costs at roughly $200 per square foot, and developed land at double or triple that, Hollywood’s hopes for anything other than small “pocket” parks seemed unattainable.  Or, that was until Chamber board member and Vice-President of First Financial Bancorp, Don Scott came to the Chamber with his idea to build a park over the freeway with total construction cost at little more than raw land acquisition in Hollywood.

According to the Los Angeles Times, Don Scott was driving home from the world-famous Hollywood Christmas Parade one chilly evening when he came to the epiphany that one could build over the freeway, similar to creating a large bridge and instead, place a large park over this underutilized area.  Although Scott was not the first to think of bridging the freeway, he was the first person willing to take on such an ambitious project.

Like all the dreams and visions chamber members have, all must go through the process of being approved by committee; and then if a project merits approval, must go before the Hollywood Chamber Board of Directors for final approval and the official “go-ahead”.  Don Scott remarked, “It was really great to have the Chamber support this huge undertaking and really put the support it needed behind it.  Leron did not hesitate to dedicate staff resources and his own efforts making this happen.”

“Though this is not a typical chamber of commerce-type of activity, we (the Chamber) felt that clearly, with all the density and development in this part of Hollywood, we need to protect area livability as well as economic sustainability so that all this progress we’re seeing can continue,” remarked Gubler. “It is amazing, you look around and you really don’t see any parks in Hollywood.  This is a project that all of us—the business community, residents, lawmakers, and community leaders can all get behind.”

True to Gubler’s prediction, Hollywood Central Park, as the Chamber calls it for now, has made leaps and bounds in the single year since Scott first imagined its possibility.  The Chamber raced to Capitol Hill with this idea last May and the project was embraced whole-heartedly by Congressmembers Diane Watson and Xavier Becerra who pledge to promote this project in the federal appropriations process this upcoming spring. 

Since then, the project has continued to receive accolades by all and has gained the official support of Mayor of Los Angeles, Antonio Villaraigosa, Council President Eric Garcetti, Councilman Tom LaBonge, District Director of Caltrans Doug Failing, Director of City Planning, Gail Goldberg; Director of City Recreation and Parks, John Mukri; and all four local neighborhood councils.  Helmi Hisserich, Regional Administrator of the Hollywood Community Redevelopment Agency (CRA) liked this proposal so much, she held a fundraiser for the project at CRA Hollywood’s 20^th Anniversary event in November and announced that the CRA would like to be the first to fund the initial phase of the feasibility study for Hollywood Central Park with $100,000 in grant funds.

Private pledges and donations to date are roughly $60,000 with the goal of reaching $500,000 by next year.  Other funding possibilities are the state bonds that were approved last November.  The CRA funding was unanimously approved by CRA’s board in November for $100,000.  That action must still be approved by the Los Angeles City Council, which is expected to act on it this month. 

Rochelle Silsbee, Chamber Vice-President of Public Policy and project manager stated, “With so much goodwill and support of this great project, we hope to see this funding sail through Council unanimously.  Still, we hope to have all of our supporters at City Council when this is placed on the agenda to show how much Hollywood really wants and needs this park space.”  Silsbee added, “The only thing we must agree upon at this point is that the parks location will remain as it is so we can show a high degree of unification in our effort to create LA’s first major cap park project. Let this set an example and be the first of many to come. ”

The current proposed location for this park is over the 101 freeway between Bronson and Wilton.  The park will be situated in an area of Hollywood with the most infill development, will be adjacent to the new high school, is at the nexus of Central and East Hollywood, is within the CRA’s Hollywood project area and is near some of the highest mass transit ridership areas in the county—with the potential to benefit as much of Hollywood and Los Angeles as possible.  This area has a density of 85,000 residents per square-mile.  Twenty-five percent of these residents are below the age of 18.

Recently, the Los Angeles Area Chamber of Commerce’s Land Use, Construction and Housing Committee unanimously voted to support Hollywood Central Park.  Final approval by the LA Chamber Board of Directors is expected in January. 

In addition, the Coalition held its first ‘scoping’ meeting with Southern California Association of Governments (SCAG) representatives who designated Central Park a “Demonstration Project” for its smart growth proposal and benefits to the community.  As a demonstration project, the Chamber can have access to SCAG’s resources that provide unparalleled community outreach assistance, state-of-the-art visualizations, and economic development strategy assistance. 

The Hollywood Chamber of Commerce encourages all members to participate in this great project either through a tax-deductible contribution, by officially supporting the park with a signed pledge form, or attending coalition meetings. 

If you would like to get more information, attend the coalition meetings, or make a donation to the park, email the Hollywood Chamber of Commerce at info@hollywoodchamber.net or call the chamber at (323) 469-8311 or visit www.hollywoodfreewaycentralpark.org.

Hollywood Central Park Facts:
Unprecedented 24 acres of new green space in Hollywood
Will “heal the divide” between East and Central Hollywood
Strong Base of Local Support
Public & Private Funding
Transit-Oriented Development
Costs less than raw land per square foot
Fights air pollution
Promotes active and healthy lifestyles

Benefit:
80,639 residents (within one-mile)
30,323 households
26% of residents are children
Up to 86% are renter-occupied housing

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How will the Central Park Freeway Project Benefit Hollywood?
We asked several of those involved in making the project happen:

“As soon as we learned there was an opportunity to bring more open space to Hollywood, Paramount was on board to help. We view this as an important environmental initiative which will not only provide neighborhood kids with much-needed recreation areas; it will also help promote the health and well-being of the entire community while creating a more beautiful Hollywood for residents and visitors alike.”
-- Charles Armstrong, President, Studio Group, Paramount Pictures

“What a great way for Don Scott and the Hollywood Chamber to give back to the community by spearheading the Hollywood Central Park project. It’s like magic – creating a park literally out of thin air. We expect this park to be a centerpiece for Hollywood.”
-- Scott Campbell, Vice-President
Central Hollywood Neighborhood Council
Real Estate Consultant, Prudential CA Realty

“This is a unique opportunity to bring the business community and the residential community together for a common goal. When I was visiting Tivoli Gardens in Copenhagen this past year, I thought of how wonderful it would be to have something similar in central Hollywood.”
-- David Gajda, President, AccessIT

“Over 4,500 new housing units are coming to this area and therefore quality of life issues will be very important.  With this increased density, open space is sorely needed. This new green space is going to serve existing residents as well as new residents with valuable recreation and will create a more walkable community.”
-- Marty Shelton, Vice President, NAI Capitol

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New Business Improvement District Begins on Sunset and Vine

Five years of dedicated effort have finally paid off with the start of the new Suns