LOS ANGELES — Three years.
That’s how long developer Estate Four waited before it could successfully acquire a property in the downtown Los Angeles Arts District neighborhood.
“We are quite new in town and we basically got hooked with this location, with the Arts District,” said Estate Four’s Paolo Carini. “So we made a bid back in the day for what they called the Ford Motor [Factory] that was unlucky and starting from 2013-14, we started looking for a different location and we finally got something in the Arts District.”
The firm paid $21.6 million to Thirty By Investments Inc. for the two-story, 44,547-square-foot building. The property, built in the 1920s is the former home of Challenge Cream and Butter.
The acquisition is nothing new for Estate Four. They’re specialists in industrial redevelopment projects.
Their first project was zona Tortona in Milan. The 3.5 million-square-foot redo of tired warehouse space was refashioned into a new shopping district melding Zegna, Hugo Boss and Armani with creative office space absorbed by the likes of Young & Rubicam, among others.
The company is also behind The Point in the Red Hook neighborhood of Brooklyn and Howick Place in London, the latter of which turned the Royal Mail Sorting Office into a venue for art galleries, Tom Ford and London Fashion Week shows.
“We’re from Italy and, to be honest, Los Angeles is not an easy city to be understood,” Carini said. “Given the fact that Los Angeles is so spread out, we wanted to have a safe bet and we think this is the best place for our usual clients and we’re talking about high-end, creative people. So that could be fashion. That could be design. That could people from the art world. We’re looking to a very particular segment of the retail world and we wanted to bring to the Arts District a concept store possibly from Europe.”
He offered up Merci in Paris by way of example.
The building is also expected to house a restaurant and about 50,000 square feet will go to a high-end private club with a possible retail component.
The building has creative office space, most of which is occupied. Fifteen of the 17 live-work units in the building are taken up by a mix of artists, designers and marketing firms.
It’s a litmus test of sorts in the market for Estate Four, but they’re already on to larger projects convinced by the burgeoning scene and revitalization happening throughout much of the rest of downtown. Carini said the firm is interested in buying more and is eyeing a significantly larger property also in downtown.
“The exciting thing about this group that bought the property is they really are bringing an international perspective,” said Brandon Gill, senior vice president in the Los Angeles office of brokerage firm CBRE, which represented Estate Four in the deal. “It sounds like it would be a huge game-changer for the neighborhood and somebody that would make a big splash.”
One of Estate Four’s future neighbors is Hauser, Wirth & Schimmel, which has exhibition spaces in New York, Zurich and London. Their latest venue will take up a 100,000-square-foot former flour mill for an art center and gallery space set to open next summer.
“It’s going to bring a lot of recognition to this neighborhood,” said Gill, who noted rents in the district have climbed four to five times what they were in the past three to five years.
Early adopters that bought into downtown’s transformation a few years ago have now given way to a new crop of retailers with even broader appeal.
“In the past, we’ve seen the smaller mom-and-pop shops come to the Arts District but we’re now seeing the bigger names,” said Jae Yoo, first vice president in CBRE’s Los Angeles office. “Downtown L.A. seemed almost abandoned by the retailers, but now there’s a lot of confidence and desire to be in this neighborhood.”
Yoo pointed to Shinola, Portland ice creamery Salt & Straw, San Francisco Bakery Tartine and Oakland coffee house Blue Bottle as examples of this new wave of retailers.
“These are household names to a lot of people from other parts of the country,” Yoo said, “and we now have them in the Arts District.”
Construction on Estate Four’s new property is expected to begin next year and will take 12 to 18 months. Carini, in the interim, is looking to attract European art galleries looking to have a presence in Los Angeles to occupy the building.
“There’s a lot more room for this neighborhood to grow. We’re still writing the story in this neighborhood,” Gill said. “The evolution, we’re just seeing the tip of the iceberg here.”