BEVERLY HILLS, CA-They’re coming to Beverly Hills. Retailers, that is. And they’re helping to create a mini retail-boomlet in this city, which is on the rebound after some tough recessionary times.
Such high-end clothing retailers as Theory and Alice + Olivia have recently opened in Beverly Hills, joining fellow clothiers Scoop NYC, Intermix and AllSaints. Also opening are Fleming’s Steakhouse and Wine Bar, while Nespresso has opened a new outlet. They are nestled in the famed “Golden Triangle” shopping district, a tourist Mecca and the subject of numerous television and film examinations.
Just this week, 450 N. Camden Drive, a 5,500 square foot retail property occupied by the Gagosian Gallery, sold for a record $2,000 per square foot for $11,050,000.
What’s causing the boom? Beyond the end of the recession, “I think retailers want to be in proven retail locations in terms of their expansion,” says Greg Schott, managing principal of L3 Capital, which owns properties in the North Beverly Drive area of Beverly Hills. “They are foregoing those secondary and tertiary markets and going where, historically, there’s been strong retail shopping.”
Beverly Hills has long been synonymous with wealth and high-end shopping. Rodeo Drive is one of the world’s best-known shopping brand names, akin to New York’s Fifth Avenue and Michigan Avenue in Chicago. It’s one of the few cities whose zip code – 90210 – is instantly recognizable, thanks to the television show “Beverly Hills 90210.”
But even such a powerful brand couldn’t fight the economic onslaught of the Great Recession. At its height in 2009-2010, Beverly Hills vacancy was estimated at about 20%-25%, Schott tells GlobeSt.com, with monthly lease rates per square foot plummeting to the $10-$12 range.
Now, vacancy in the area is less than 10%, Schott says, with rents up 30% to 40% from what they were in 2009 to 2010. Current monthly rates in Beverly Hills are average about $15 per square foot, he says.
Theory, a New York City-based retailer known for its women and men’s clothing designs, will occupy 3,400 square feet at 408 N. Beverly Drive, while New York City-based Alice + Olivia, a women’s fashion brand, will take 2,000 square feet at neighboring 410 N. Beverly Drive.
“We’re starting to see a lot of competition for spaces that are available or that people think could be available,” Schott says.
L3 Capital, which stands for the age old real estate adage “location, location, location,” focuses on retail assets in the $10-$50 million price range. The firm’s portfolio includes single tenant, multi-tenant and mixed-use properties.
For the past three years, L3 has been active in top tier U.S. cities, completing several deals in high-end urban markets. Its most recent deals include a four-building $13 million purchase in Chicago’s popular Southport Ave. corridor and a 42,000-square-foot property in New York’s SoHo neighborhood that fetched a price of $41.5 million.