U.S. mall owner Macerich and office developer Hudson Pacific Properties are redeveloping the Westside Pavilion mall in Los Angeles into a campus featuring 500,000 square feet of office space, according to the firms.
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 expect to be complimentary amenities for tenants. The estimated total project costs are in the range of $425 million to $475 million. Hudson Pacific will hold 75% of the joint venture and will be the property’s day-to-day operator and Macerich, the current owner of the property, will own 25%.
Westside Pavilion opened in 1985 and has struggled since the $1-billion renovation of nearby Westfield Century City, which took Nordstrom and Macy’s from Westside Pavilion. The property is encumbered by a $155-million CMBS conduit loan that does not expire until October 2022. That loan will likely need to be modified or paid off to accommodate the redevelopment.
The redevelopment is targeted to the rising demand for creative office space for high-tech, media and start-up ventures on the west side of Los Angeles where Westside Pavilion is located. Demand for creative office space is strong, according to local office leasing brokers. Currently, more renovations and creative office conversions are in the pipeline than ground-up new office development, according to Michael Soto, research manager at real estate firm Transwestern. Of the 4.4 million square feet of office space on its way in Los Angeles, 2.6 million square feet is conversions, or 59%.