It’s official. CIM Group announced today that it has sold the recently completed 286-room hotel at the Sunset La Cienega project. In a separate press release, Starwood Capital Group announced that it is the buyer, as has been long rumored.
Starwood now says the hotel, known as the James until an announcement in June that it would be called the 1 West Hollywood, will open on Aug. 11 as The Jeremy. Then at some point near the end of next year, it will change names again and be rebranded as the 1 West Hollywood.
Opening the hotel in August as The Jeremy likely will allow Starwood to begin generating revenue while it completes the rehabilitation of the new building to fit the standards of its “1” hotels, which it markets as an “eco-conscious luxury sustainable brand.” It also will improve the City of West Hollywood’s chance of getting some revenue from the hotel room occupancy tax paid by the hotel’s visitors.
The city had expected the hotel to be in business earlier, given that its opening originally was scheduled for March of this year, then moved to May. In June, real estate trade publications said it likely had been purchased by Starwood and would be branded as the “1”.
The sale moves closer to the finish line the longest-running development project in West Hollywood. “If you’d been holding your breath since we last reported movement on the Sunset Millennium project, well, you’d be dead by now,” said CurbedLA, the real estate news site, referring to the project by its earlier name in a story published in 2013.
Sunset La Cienega was the first major construction project approved after West Hollywood was incorporated as a city in 1984. In 1999, the City Council approved plans for the project, then called the Sunset Millennium. It called for construction on three parcels – one on the southeast corner of Sunset and La Cienega, one on the southwest corner of Sunset and La Cienega) and one on the southwest corner of Sunset and Alta Loma.
But because of problems securing financing, the original owner, Sunset Millennium Associates, sold the property to the CIM Group in 2011. CIM Group also owns the Lot movie studio on Formosa Avenue and the Hancock Lofts in WeHo’s Boystown.
The Sunset/Alta Loma part of the project was completed relatively quickly, with 100,000 square feet of retail space (including the Equinox gym) and a 10-story office building. It changed hands and was sold by Palo Alto-based Broadreach Capital Partners late last year to Kilroy Realty Corp. That purchase, reported first by The Real Deal, a real estate trade website, totaled $210 million or $1,179 a square foot, making it one of the most expensive commercial real estate deals ever in West Hollywood. Tenants in that complex include Equinox gym, H&M apparel, Olive Peoples eyewear, SoulCyle exercise salon, Swarovski, Regus and Primo, the coffee bar.
The hotel, which sits on the southeast corner of Sunset and La Cienega, consists of two 10-story towers with 15,000 square feet of retail space. It has 286 hotel rooms, with nearly three dozen suites. According to Curbed LA, they include two penthouse lofts with private terraces, two bungalow suites with direct access to the pool, and nine suites with floor-to-ceiling windows that measure over 600 square feet.
The middle parcel has two eight-story towers with 190 residential units and 55,000 square feet of retail, including a new Fred Segal store. Both parcels have large public plazas with viewing terraces and contain large billboards. The residential buildings on that parcel recently were purchased from CIM by Korman Communities, which planned to use what was originally intended to be a condominium as short-term corporate rentals. Korman backed away from that plan shortly after it announced it and discovered that the City of West Hollywood has banned rentals of residential property for fewer than 31 days. Korman now has announced that it will rent out the 80 units in the east tower and that the 110 units in the west tower will be rented for stays of one month or more.
However, given the city’s separate ban on corporate rentals, that also might not be legal and will require the city to approve a change in the development agreement for the property. Another option for Korman would be to get the city to allow it to use those rooms as hotel rooms putting it in competition with The Jeremy.