Hudson Pacific Properties and Macerich to Redevelop Westside Pavilion in LA
By Alison Stateman March 9, 2018 3:32 pmreprints
Hudson Pacific Properties and Macerich have partnered to transform the Westside Pavilion mall on the Westside of Los Angeles into a campus featuring 500,000 square feet of creative office space, according to an official joint statement.
Approximately 100,000 square feet of the 600,000-square- foot property will be retained for existing entertainment and retail space. The 12-screen Landmark Theatres complex will remain in the reconfigured mall, as will Westside Tavern restaurant, both of which have performed well and will be “great amenities to tenants,” sources familiar with the deal told Commercial Observer.
The companies estimate total project costs in the range of $425 million to $475 million, with each partner contributing their pro-rata share, according to the official statement. (Those figures include the undisclosed estimated value of the existing mall.) Hudson Pacific will hold 75 percent of the joint venture and will be the property’s day-to-day operator and Macerich, the owner of the property, 25 percent.
The redevelopment, set for completion in 2021, is indicative of the rising demand for creative office space citywide, but particularly on the Westside, home to a large concentration of high-tech, media and start-up ventures. Sources familiar with the deal at HPP, which focuses on acquiring, repositioning, developing and operating high-end office and media and entertainment properties in select West Coast markets, said the venture began receiving inquiries from interested tenants since rumors began circulating about the joint venture and potential office conversion last year.
“Westside Pavilion is a perfect opportunity for us to reposition a marquee asset in a premier location. The project is poised to capture the strong demand from tenants for creative office space on the Westside of Los Angeles,” Victor Coleman, the chairman and CEO of Hudson Pacific, said in the official statement.
The partnership between developer Hudson Pacific Properties and Macerich, also reflects a wider national trend in which struggling shopping malls are being redeveloped in order to survive.
“Our joint venture with Hudson Pacific will enable us to maximize the value of this incredibly well-situated real estate with dynamic new uses,” Art Coppola, the chairman and CEO of Macerich, said in the joint statement.
The Pavilion, which opened in 1985, has struggled with weakening occupancy rates given the rise of online retail and nearby competition, including the Westfield Century City, which completed a $1 billion revamp in 2017. The redeveloped mall has siphoned off business and longstanding tenants from Westside Pavilion, with Nordstrom leaving for the Century City mall last year and Macy’s, which already opened a new store at Century City, closing its location at the Westside Pavilion later this month. The Westfield mall also became home to the first West Coast branch of Eataly, the high-end gourmet Italian food marketplace, which opened last November.