The November 7 bidding deadline has passed and CBRE, one of the world’s leading commercial brokerage firms, won’t disclose the number of offers made on the largest collection of business properties in Pacific Palisades. ‘We have a confidentiality agreement with the owners,’ said Dan Riley, senior vice president of CBRE. ‘Yes, of course there is interest in the property and it will be up to ownership to make the final decision. No one has been chosen yet.’ Early in October, CBRE revealed that the bickering co-owners, consisting of 14 entities operating under the landlord group Pacific Palisades Properties, had placed the 2.77 acres of property on Swarthmore and Sunset on the market. CBRE did not present a starting bid price in its confidential marketing report, which described the properties as a ‘pride of ownership ‘trophy’ asset in the esteemed community of Pacific Palisades.’ However, the report revealed property tax projections of $631,714 for 2013, which would indicate an estimated brokered price of more than $50 million’a price tag that one local developer called ‘overestimated’ and ‘unrealistic.’ Inside sources tell the Palisadian-Post that at least 10 offers have been made on the portfolio, which includes the entire east side of 1000 Swarthmore (from Bentons to City National Bank), all of the west side from Monument Street to Intima Lingerie, the open-air parking lot along Monument and three vacant properties on nearby Sunset Boulevard, including the former U.S. Bank (the bank is still paying rent) and the former Office Supplier. The CBRE marketing report touted redevelopment plans for the triangular parking lot bordered by Swarthmore and Monument, which would include a ground floor of retail, ‘two levels of residential multi-family units, with approximately 115 units at 900 sq. ft. each’ and underground parking. The high rental projections made in CBRE’s report, estimated to rise to more than $7 per sq. ft. by 2018, ‘are ridiculous and if they end up getting those kind of prices supporting this package, that would exclude every mom-and-pop shop in the Palisades,’ said a local developer, adding that he would bid no higher than around $30 million on the portfolio. Another developer, who also wished to remain anonymous, said he bid about $32 million, well below the estimated brokered price. Those who placed bids were asked to fill out a confidential ‘buyer qualification questionnaire,’ a copy of which was attained by the Post via our sources. ‘In order for Seller to determine whom they may wish to consider for the best and final round of the marketing campaign, Seller has requested that the below/attached [questionnaire] be sent out to all groups that have submitted offers,’ stated the cover letter of the questionnaire. Questions in the document include whether bidders plan to renovate existing structures or raze buildings to build new projects, and whether they are ‘willing and able to close this transaction by year end.’ ‘Concerning your future plans for the Pacific Palisades Portfolio, do you plan to renovate the existing building structures or do you plan to raze the project’in whole or in part’and build a new project? Please elaborate/explain your plans,’ read the questionnaire. Bidding entities were also asked to provide a bio, a list of real estate owned, and information on their equity and joint venture partners. A deadline of Tuesday, November 13 at 12 p.m. was chosen for what CBRE described as the ‘best and final round of the marketing process.’ Since 2007, a number of Palisades Properties’ tenants on Swarthmore and Sunset have gone out of business because of high rents and a struggling economy. Six of these deteriorating spaces have remained vacant for years. Nevertheless, according to CBRE’s report, the rents are projected to double in the next decade. For the vacant properties that formerly included businesses such as a la Tarte, The Prince’s Table and Village Books, CBRE projects a rate of $6.43 per sq. ft. in 2014 that will increase to $7.24 per sq. ft. by 2018. These are rates that developers, who were contacted by the Post, agreed are too high to generate productive business in the area. The current median lease rate paid by current tenants is about $5.50 per sq. ft.
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