Developers Aim to Take Advantage of the Views and the Vibe

By Karen Jordan
June 1, 2018

Hotel construction has increasingly become part of the view as locals and tourists cruise down Sunset Blvd. in West Hollywood, CA.

Credit: Karen Jordan for CoStar Group Inc.

Driving down the Sunset Strip these days, it’s impossible to miss the cranes and other signs of construction happening.

Much of the action revolves around hotels. There are no fewer than five projects underway along this famous patch of boulevard between Hollywood and Beverly Hills.

Bob Sonnenblick, chairman of Sonnenblick Development LLC, said it boils down to practicality.

“The reason so many hotels are being built on the Sunset Strip is because there is simply no other place on the entire West side where there is high rise-approved land,” he said. “All of Santa Monica and Beverly Hills are now down-zoned to a three-story maximum height. Where else can you find a commercially-zoned piece of land to build a high-rise hotel? It just doesn’t exist anymore today.”

That combined with the “amazing city-lights views,” Sonnenblick predicts there will be continued new development on the Sunset Strip.

The mile-and-a-half long Sunset Strip is also “an iconic location around the world,” according to Matthew May, president of May Realty Advisors. “Sunset has amenities. Sunset has views. Sunset has a history. Sunset has branding.”

The large number of businesses, including talent agencies, entertainment entities, restaurants and night life also make it attractive to developers, May said.

» The sun set on the House of Blues Sunset Strip when it was demolished last year. The site is now being transformed into a Pendry hotel. It is being built by Beverly Hills-based Combined Properties and AECOM and designed by Culver City-based Ehrlich Yanai Rhee Chaney Architects (formerly Ehrlich Architects).

The project will include a 149-room hotel, 40 residential units and around 25,000 square feet of retail space. In addition, the project will offer for-sale residential condos.

» A boutique hotel is also in the planning stages at 8240 Sunset Blvd., formerly the site of the Sunset Beach restaurant, from developer, A.J. Khair Construction Inc., according to the developer’s website.

» Then there’s the Edition West Hollywood Hotel and Residences at 9040 W. Sunset Blvd., at the intersection of North Doheny Drive, from New York-based developer Witkoff Group, Marriott and LA-based Ian Schrager. It will have 190 rooms and 20 condos, according to the City of West Hollywood. The 4-Star hotel should deliver in September, according to CoStar research.

» The 286-room Jeremy Hotel recently delivered at 8490 Sunset Blvd.

» A proposed project at 8950 Sunset Blvd. is slated to offer a 165-room boutique hotel, according to CoStar data. It would include a “jewelry box” design, according to the developer’s website. The project would also include four residences, according to the City of West Hollywood.

A public plaza will be at the center of the hotel with views through a glass bottom rooftop pool suspended six stories above. There will also be a supper club on multiple levels in addition to residential units, retail space and a recording studio. Santa Monica-based Hirsch Bedner Associates is designing it. It was previously slated to be a James Hotel, according to CoStar research.

» The proposed Frank Gehry-designed, $300-million 8150 Sunset project from developer Townscape Partners has faced some challenges. The state’s 2nd District Court of Appeals recently overturned a previous ruling that was blocking the necessary demolition of the former Lytton Savings Building, where Chase Bank is now, to build the project.

However, the developer was also dealt a blow when, at the same time, the court did not hold a public hearing on closing the right-hand lane from Sunset Boulevard to Crescent Heights. A formal review will now have to be held.

» There were also originally plans for an extended stay hotel at 8500 Sunset. CIM Group sold that property in June of last year to a joint venture between Korman Communities and Brookfield Property Group for about $168 million, or about $885,000 per unit, according to CoStar data. It was the largest recent trade in the area.

Korman Communities’ initial plans to convert the property to an extended stay hotel were blocked by local ordinances that prohibit short-term rentals, according to CoStar Market Analytics. The project opened to renters in the fourth quarter of 2017.

» West Hollywood-based Charles Company has also reportedly filed plans with the city to build a 185-room hotel that would include 7,500 square feet of restaurant space and around a dozen apartments on the Strip. It would be located at Sunset and Doheny and designed by R & A Architecture and Design.

According to May, there may also appear to be a hotel boom on the Strip right now because many of the hotel projects took years to get through entitlements.

Hotels on the Sunset Strip also have distinct advantages over hotels in other parts of the city which mainly rely on Monday through Thursday traffic, according to Alan Reay, president of Irvine-based Atlas Hospitality Group.

“The Sunset Strip capitalizes on Monday through Thursday and increases even more on the weekends because of the entertainment business,” Reay said.

On weekend nights, it is a virtual parking lot as cars and limos cruise to night clubs and restaurants on the Sunset Strip.

“What’s driving the Sunset Strip is developers and lenders are looking at how well it’s doing,” Reay said. “It’s such a strong market.”