BRANDON MICHAELS GROUP Melrose 6721 AVENUE OFFERING MEMORANDUM
PRESENTED BY: BRANDON MICHAELS Senior Managing Director of Investments Senior Director, National Retail Group Tel: (818) 212-2794 Fax: (818) 212-2710 bmichaels@marcusmillichap.com License: CA #01434685 www.brandonmichaelsgroup.com BRANDON MICHAELS GROUP 6721 MELROSE AVENUE AREA OVERVIEW NON-ENDORSEMENT AND DISCLAIMER NOTICE NON-ENDORSEMENTS Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. FINANCIAL ANALYSIS ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DE- TAILS. DISCLAIMER THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS OF VALUE AND SHOULD NOT BE CONSIDERED AN AP- PRAISAL. This information has been secured from sources we believe to be reliable, but we make no representations or warranties, express or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. 2017 Marcus & Millichap. All rights reserved. COMPARABLES ANALYSIS OFFICES NATIONWIDE www.marcusmillichap.com 2 3
MELROSE Melrose Avenue and it's surrounding neighborhoods are at the cultural and geographical heart of the Los Angeles region, surrounded by must-see hotspots in every direction. 1.2 million visitors came to the area last year $750 million dollars generated by tourism to our local economy last year 16,599 jobs supported by tourism in the area GLOBAL TOURISM DESTINATION AFFLUENT NEIGHBORHOOD DEMOGRAPHICS Median age: 39 Average household income within a 1 mile radius: $97,211 Population within a 5 mile radius: 1,054,472 DEVELOPMENT ON MELROSE AVENUE Rare opportunity to purchase in a strong rental market. Significant amount of movement and turnover in the immediate marketplace, creating an opportunity for new construction to enter the market and position the submarket for the future. Upon completion of surrounding developments and with continuing improvements to the immediate area, the rental market will experience significant growth and offer outstanding returns for long term investors. WHY BUY ON MELROSE AVENUE? SHOPPING Scores of cutting-edge labels can be found along Melrose Avenue, from avant-garde brands to casually luxe clothing makers. Melrose Avenue is renowned throughout the world as one of Los Angeles most walkable and unique shopping destinations. GETTING AROUND You can tuck your car away in a hotel garage and stroll to great restaurants, cafes, bars, nightclubs and shopping. Within the neighborhood's 1.6 square miles, you can people-watch on the Sunset Strip, sightsee on Santa Monica Boulevard, stop at a great cafe or restaurant on Melrose Ave. and shop at the gorgeous boutiques of the West Hollywood Design District. It s easy to sightsee all on foot! DINING From the Melrose avenue to the Sunset Strip, the area never seems to sleep. There are clubs to be seen, live music to be heard, and coffee shops to work from. Fuel up with breakfast, brunch, lunch and dinner at a plethora of celebrity-frequented restaurants so that you can explore the lively neighborhood until the wee hours of the morning. WEATHER Southern California s persistently pleasant weather means it s practically always the best time to visit Los Angeles. It s sunny almost 300 days a year and the average high temperature in many parts of L.A. fluctuates less than 10 degrees through the year. 4 5
EXECUTIVE SUMMARY A RARE OPPORTUNITY TO ACQUIRE A MELROSE AVENUE CREATIVE OFFICE/RETAIL BUILDING WITH DEVELOPMENT POTENTIAL IN THE HIGH-PROFILE MELROSE DISTRICT Melrose 6721 AVENUE Marcus & Millichap has been selected to exclusively market for sale 6721 Melrose Avenuea 3,046 square foot office or retail building located on the signalized corner of Melrose Avenue and Mansfield Avenue in the highly sought-after Melrose district of Los Angeles, CA. Situated on Melrose Avenue just east of North La Brea and west of North Highland Avenue, 6721 Melrose is ideally located in one of Southern California s busiest shopping thoroughfares. The property offers excellent visibility with 86 Feet of frontage along Melrose Avenue on a bustling corner lot with parking in the rear. There is a large 14 x 48 single sided billboard on the property that is currently on a month to month lease, providing the potential upside in stabilizing the lease term or the ability to remove from the property if the ultimate plan is to re-develop the property. As a result of its prime location and significant growth in the immediate area, the property is ideal for a retail, office, or creative office use. The subject property is currently vacant, allowing the maximum in flexibility of potential uses. The property is ideally situated on 7,091 square feet of land, offering the potential to re-develop the property and utilize the current C4 zoning. The property is ideally located in a Tier 1 Transit Oriented Community. There are currently 14 parking spaces in the rear of the property, and the parking can potentially be re-stripped to create additional parking. 6721 Melrose is ideally located in an enterprise zone, allowing for a multitude of potential uses including restaurant and medical. The Melrose Shopping District and it's surrounding neighborhoods are at the cultural and geographical heart of the Los Angeles region, surrounded by must-see hotspots in every direction. The neighborhood is among the top destinations in the world, and this irreplaceable location benefits from high daily traffic counts north of 50,000 cars per day at the corner of Melrose Avenue and N Highland Avenue. 1.6 1.6 square miles of walkable hotspots, restaurants, nightlife, and shopping in West Hollywood 2,456 2,456 Businesses within a 1 square mile of 6721 Melrose Avenue 91 6721 Melrose Avenue scores an 91/100 on Walkscore.com 6 7
HOLLYWOOD 6721 Melrose AVENUE DOWNTOWN 8 9
PROPERTY OVERVIEW Property Address Price $3,400,000 6721 Melrose Avenue FAIRFAX Proforma CAP Rate 5.18% Price/SF (Building) $1,116 CORNER Price/SF (LAND) $479 Building SF 3,046 Land SF 6,970 Property Type Creative Office Potential Use Year Built 1953 Office/Retail/Restaurant/Medical Melrose 6721 AVENUE APN's 5524-013-022 Zoning C4-1X4 SIDE Transit Oriented Community Tier 1 Type of Ownership Occupancy Parking Billboard Fee simple Vacant 14 Surface Spaces 14' x 48' Single Sided 10 11 REAR
INVESTMENT HIGHLIGHTS IRREPLACEABLE MELROSE AVENUE LOCATION Ideally located along a price stretch of Melrose Avenue between North La Brea and North Highland on the corner of Melrose Avenue and Mansfield Avenue POTENTIAL DEVELOPMENT OPPORTUNITY C4-1XL zoning within a Tier 1 Transit Oriented Community allows the potential for future development. The property FAIRFAX BEVERLY HILLS WEST HOLLYWOOD directly adjacent to 6721 Melrose is currently for sale at $2,100,000. In addition, two new development projects are currently underway in the immediate area MULTITUDE OF POTENTIAL USES Property is currently creative office, complete with exposed wood ceilings, concrete flooring, and inviting exterior space. Ideally located within an enterprise zone, there is the potential for additional uses, including retail, restaurant, or medical WALKABILITY - 6721 Melrose Avenue has a score of 91/100 for walkability. Iconic retailers and trendy/hip boutiques and restaurants populate Melrose Avenue and it is a popular haven for the rich and famous HIGH DAILY TRAFFIC COUNTS Ideally located on the signalized corner of Melrose Avenue and Mansfield Avenue, just 1 block west of the signalized corner of Melrose Avenue and N Highland Avenue, which experiences over 50,000 vehicles per day IDEAL OWNER USER OPPORTUNITY Property will be delivered vacant, creating an ideal opportunity for an owner-user Buyer to occupy the property for their own business use Melrose 6721 AVENUE MELROSE RESTAURANT ROW The immediate area is home to multiple high-end restaurants, including Pizzarie Mozza, Osteria Mozza, Chi Spaca, Trois Mec, Petit Trois and multiple others within close proximity 12 13
PROPERTY SUMMARY ADDRESS 6721 Melrose Avenue, TRAFFIC COUNTS Intersection of Melrose Avenue and N Highland Avenue: 53,183 vehicles per day SITE The subject property is located on the norheast signalized corner of Melrose Avenue and Mansfield Avenue PARKING 14 Surface Spaces are available; Ratio of 4.60/1,000 SF SQUARE FOOTAGES The building square footage is 3,046 square feet, located on a lot size of 6,970 square feet FRONTAGE AND ACCESS 86 feet of frontage on Melrose Avenue and 102 feet along Mansfield Avenue ZONING 6721 Melrose Avenue is located within zoning of C4 Melrose 6721 AVENUE YEAR BUILT The subject property was built in 1953 PLAT MAP 14 15
AREA OVERVIEW 16 17
MELROSE AVENUE TOP ATTRACTIONS Melrose Avenue is renowned throughout the world as one of Los Angeles most walkable and unique shopping, dining and entertainment destinations. Downtown Melrose encompasses the 22 blocks along Melrose Avenue that stretch from Fairfax to Highland. More than 300 alternative and independent stores offer a wide array of merchandise found nowhere else in the city. LOCATION Melrose Shopping District is bounded by Beverly Hills and West Hollywood on the west, Greater Wilshire to the south, and Hollywood to the north and east. CLIMATE Los Angeles has a Subtropical-semi-arid climate with year-round warm weather. The record high temperature of 111 F was recorded September 26, 1963, while the record low of 24 F was recorded on January 4, 1949. Snow is rare in Los Angeles, with the last accumulation occurring in 1949. Rainfall is sparse (only 13 inches annually), and falls mainly during winter months. ACCOMODATIONS Melrose and surrounding neighborhoods include world-renowned hotels such as the Chateau Marmont, SLS Hotel, Sunset Marquis, Sunset Tower Hotel, Sofitel LA at Beverly Hills and Mondrian Los Angeles. DINING From the Melrose Avenue to the Sunset Strip, the area never seems to sleep. There are clubs to be seen, live music to be heard, and coffee shops to work from. Fuel up with breakfast, brunch, lunch and dinner at a plethora of celebrity-frequented restaurants so that you can explore the lively neighborhood until the wee hours of the morning. SUNSET STRIP From the heights of swank hotel rooftops like the Mondrian s SkyBar and the Tower Bar at Sunset Tower Hotel, to the glam-grunge of rock clubs like The Viper Room and Whisky a Go Go, there s a setting to suit your style and mood. In addition to clubs with music ranging from indie singer/songwriters to major headliners, there are iconic comedy clubs such as The Laugh Factory and the Comedy Store. The Sunset Strip isn t just rock and roll. Spend the afternoon shopping at Sunset Plaza, which contains more than 20 stores, like Armani Exchange and H&M. ROBERTSON BOULEVARD Robertson Boulevard has become a haven for celebrities and paparazzi. This is partially due to a large influx of unique boutiques and designer clothing & jewelry stores such as Agnes B, Curve, Lisa Kline, Kitson Boutique, Williams Sonoma, Armani Exchange, Michael Kors, Ralph Lauren, Ted Baker, M A C, Chanel, Gypsy05, Intermix, Tory Burch, Max Azria, Beach Bunny Swimwear, and Erica Courtney, which is a mecca for many celebrity shoppers. In addition, several popular celebrity-infused eateries are located on Robertson Boulevard, such as The Ivy. NEARBY HOT SPOTS SHOPPING Melrose Avenue is one of L.A. s most famous streets, featuring a myriad of shopping. Melrose runs north of Beverly Boulevard and south of Santa Monica Boulevard. Along its "west end," Melrose Avenue is all about strolling and shopping, so bring dough and plenty of it. The street begins at Santa Monica Boulevard where the cities of Beverly Hills and West Hollywood meet, otherwise known as the intersection of posh and funky. 18 19
NEW DEVELOPMENTS CURRENT MIXED-USE DEVELOPMENTS IN THE IMMEDIATE AREA 7000 MELROSE - MELROSE AVENUE AND LA BREA AVENUE On the southwest corner of La Brea and Melrose the site is currently occupied by a building originally constructed in the 1920 s. This building, once a remarkable Spanish revival building had been remodeled beyond recognition. The southeastern half of the block is now vacant, and used primarily for parking. The proposed plan is intended to combine both sites and to provide for 32 units of live work lofts, some affordable, over 10,000 sf of new commercial space. Both buildings are to be integrated into the total design of the block. Parking is to be provided for the entire Tthe project has occupied roof decks which are partially covered with solar panels which provide shade and privacy. 7000 MELROSE SOUTHWEST CORNER OF LA BREA AVE AND MELROSE AVE 6721 Melrose AVENUE 700 HIGHLAND 7000 MELROSE SOUTHEAST CORNER OF HIGHLAND AVE AND MELROSE AVE SOUTHEAST CORNER OF LA BREA AVE AND MELROSE AVE 700 HIGHLAND - HIGHLAND AVENUE AND MELROSE AVENUE A gas station at Melrose and Highland Avenues has been demolished, clearing the way for the construction of a new apartment building on the corner property. The project site will yield a four story building featuring 19 apartments over 3 ground floor commercial units and its required parking. The upper levels are live work residential units who share a common open space with a swimming pool. The façade of the upper levels has been designed with an all glass skin imprinted with a supergraphic. The supergraphic frit provides for the graphic visibility from the outside while providing for both increased privacy and shade to the interior. 20 21
DEMOGRAPHICS 36,698 Total Population of Mid-Wilshire. The median age is 39. $97,211 538,155 $65,281 EDUCATION 58% MALE 42% FEMALE Average HH income within 1-m radius Daytime Population within 5-m radius Median HH income within 1-m radius 14.7% 24.6% 27.6% 13.9% High School Associates Degree Bachelor s Degree Grad Degree 95,447 Owner Occupied Households within 5-m radius 326,757 Renter Occupied Households within 5-m radius 1,031,472 Population within a 5-m radius BUSINESSES Melrose and it's surrounding neighborhoods are home to innovative industries and a magnet for highly skilled professionals. Companies ranging from retail, tourism and nightlife, restaurants, entertainment and media, as well as arts and design are drawn to the area's creative workforce, as well as its high quality of life. TOP EMPLOYERS Metro IAC/CityGrid Media City of West Hollywood Sunset Marquis London West Hollywood Standard Hotel Mondrian Hotel Andaz West Hollywood Saddle Ranch Chop House 22 23
FINANCIAL ANALYSIS 24 25
FINANCIAL ANALYSIS RENT ROLL TENANT SF BUILDING % CURRENT RENT PROFORMA RENT PROFORMA RENT /SF LEASE TYPE LEASE TERM Vacant 3,046 100% - $12,184.00 $4.00 NNN - Billboard* - - $2,000.00 $2,500.00 - - Month to Month TOTAL 3,046 100% $2,000.00 $14,684.00 $4.00 *Billboard is currently month to month. Lease can potentially be renewed at a higher rate. PRO-FORMA OPERATING DATA OPERATING DATA PRO FORMA Scheduled Lease Income $176,208 NNN Charges $59,167 Effective Gross Income $235,375 Expenses $59,167 Net Operating Income $176,208 PRICING INFO EXPENSE BREAKDOWN* PER YEAR PER SF Taxes @ 1.20% $40,800 $13.39 Insurance $1,066 0.35 Utilities $5,635 1.85 Trash $487 0.16 Janitorial $2,285 0.75 Repairs & Maintenance $3,046 1.00 Management $5,848 1.91 TOTAL $59,167 $19.42/$1.62 *Projected Expenses 9% 5% 4% 2% TRASH 1% Price $3,400,000 Price/SF (Building) $1,116 Price/SF (Land) $479 Proforma CAP Rate 5.18% 10% 69% 26 27
COMPARABLES 28 29
SALE COMPARABLES LEASE COMPARABLES # ADDRESS SALE PRICE CAP RATE PRICE/SF BLDG SF LAND SF 1 1051 N Highland Ave CLOSE OF ESCROW ZONING $3,029,000 - $1,270.02 2,385 18,726 1/4/2017 LAMR1 # ADDRESS RENT/SF/YEAR RENT/SF/MONTH LEASE TYPE SPACE AVAILABLE 1 2 755 N Highland Ave 941-945 N Highland Ave $42.00 $3.50 NNN 4,599 $39.00 $3.25 NNN 15,000 2 819 N La Brea Ave $4,100,000 4.18% $802.98 5,106 10,454 6/20/2018 C4-IVL 3 4 604-614 N La Brea Ave Los Angeles, CA 90036 629-633 N La Brea Ave Los Angeles, CA 90036 $48.00 $4.00 NNN 1,200 $40.20 $3.35 MG 9,161 3 843 N La Brea Ave $3,500,000 - $1,129.03 3,100 10,454 1/25/2018 C4-IVL 5 6 712-716 N La Brea Ave 6920 Melrose Ave $42.00 $3.50 NNN 11,000 $54.00 $4.50 NNN 2,600 4 6621 Melrose Loft, Unit 2 $1,850,000 - $880.95 25,000 6,534 4/30/2018 LAC4 7 8 7126 Melrose Ave Los Angeles, CA 90046 7164-7168 Melrose Ave Los Angeles, CA 90046 $27.00 $2.25 NNN 4,800 $41.40 $3.45 MG 475 5 6700 Melrose Ave $4,200,000 - $1,223.42 3,433 8,712 FOR SALE LAC2 9 10 7257-7257 1/2 Melrose Ave Los Angeles, CA 90046 1009-1023 N Orange Dr $60.00 $5.00 NNN 1,200 $46.20 $3.85 MG 4,340 6 911 N Orange Dr $15,500,000 - $911.76 17,000 29,621 12/20/2017 LAMR1 11 12 6910-6912 Santa Monica Blvd 1040 N Sycamore Ave Hollywood, CA 90038 $39.00 $3.25 NNN 6,666 $54.00 $4.50 NNN 4,309 AVERAGE $5,363,167 $1,036.36 9,337 14,084 AVERAGE $44.40 $3.70 5,446 30 31
BRANDON MICHAELS GROUP Melrose 6721 AVENUE BRANDON MICHAELS Senior Managing Director of Investments Senior Director, National Retail Group Tel: (818) 212-2794 Fax: (818) 212-2710 bmichaels@marcusmillichap.com License: CA #01434685 www.brandonmichaelsgroup.com