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Saturday, Jun 10, 2023

Real estate column

Homeowners and builders are at it again in Sherman Oaks, but this time residents are using a different weapon of protest. Rather than lobbying elected officials to halt a controversial proposed development, residents are asking the city to buy the land outright and preserve it as open space. And the city is attempting to do just that. The city of Los Angeles is negotiating to buy about 80 acres of land in Sherman Oaks in an effort to keep the parcel development-free. The Deervale-Stone Canyon site which lies between Mulholland Drive on the north, Valley Vista Boulevard to the south, Beverly Glen on the west and the San Diego (405) Freeway to the east is the largest parcel of undeveloped land in Sherman Oaks. The parcel, which is owned by Glendale-based developer Shawbeth Inc., is planned for a luxury residential community unless the city is able to negotiate a purchase with the owner. “We would very much like to purchase the land,” said Sharon Mayer, chief field deputy to L.A. City Councilman Michael Feuer. “I don’t know whether it will be successful or not.” Money for the purchase would come from Proposition K, passed by voters in 1996, which among other things empowers the city to assess property owners in the area between Laurel Canyon and the San Diego Freeway up to $4 million for open-space projects. The city, through the Department of General Services, has been negotiating with Shawbeth, but the department is prohibited from making a bid that exceeds the appraised value of the land. Mayer would not comment on the negotiations, except to say, “the property was appraised at less than $4 million.” But according to Shawbeth, the city’s offer is well under what the property is worth. “The price they offered is just below our cost and the fair market value,” said Nicholas Lam, the Shawbeth vice president in charge of the development. “If the price is realistic, we’d be interested in pursuing that option, but we have other options too.” Lam said Shawbeth has received an offer from another developer interested in purchasing the site. The company is also considering developing the land itself. Lam said Shawbeth has filed applications to build on 80 of the 103 acres owned by the company. The planned development would consist of 24 homes, each on an average 3.3 acres of land. The homes would look out over Mulholland Drive with panoramic views of the city and sell for over $1 million each. Shawbeth has developed similar projects before. The company built a 60-home subdivision in Rancho Palos Verdes with homes priced in the $700,000-to-$800,000 range. And it is working on a $26 million project involving 35 homes in the same price range in Westlake Village. Shawbeth has owned the Deervale-Stone Canyon site for about 10 years, but only decided to move forward with the project in the last year and a half because of the strength of the real estate market. “Now is a very good time,” Lam said. “The market is so good. In the next two to three years, appreciation will be much stronger, so everyone feels good.” The city is hampered not only by the appraisal value but also because the deal would have to close by June 30, the end of the budget year that permits the $4 million assessment for this particular project. Once the deadline passes, the likelihood is that other projects and other areas of the city would take precedence. “It’s exceedingly unlikely that this will be a priority next year,” said Mayer. If the city is unable to buy the land and Shawbeth proceeds with its development plans, Mayer said she expects existing homeowners to continue their fight to keep the land as open space. “This could be a contentious issue,” she said. Lam said he has received mixed signals from area homeowners. “We’re working with the neighborhood and we’ve been talking to them on and off,” he said. Homeowners near the Shawbeth site have been supportive because they believe the development would boost their property values. Others have voiced opposition. “There are always people for and against,” Lam said. “We have to walk the fine line.” Bigger slice of The Plant Ricon Corp. in Pacoima just traded in a lease on a 154,000-square-foot property in the industrial complex now under construction at the former General Motors assembly plant site for a 200,000-square-foot facility in the same complex. The company, which manufactures wheelchairs and other equipment for the physically handicapped, has been occupying 125,000 square feet in four buildings in Pacoima. Ross Thomas, principal at Delphi Business Properties in Van Nuys, which handled the lease negotiations, said the company asked him to renegotiate with the developers, Selleck Development Group and Voit Cos., because it has outgrown the space it first planned to occupy during talks that began last September. The office space configuration will remain the same under the new lease; the additional space will be devoted entirely to manufacturing, Thomas said. Cutting Coast land H.F. Ahmanson & Co., which acquired Coast Savings Financial Inc. last month, is selling Coast’s 30-acre campus in West Hills. Ahmanson, the corporate parent of Home Savings of America, hired the commercial brokerage firm Cushman & Wakefield of California Inc. to market the 380,000-square-foot office property in the West San Fernando Valley. This is the next chapter in the storied history of the 40-year-old office park. It initially was developed as a research-and-development site for an electronics firm, then sold in 1966 to Hughes Electronics Corp. for use as administrative offices for its missile systems operations. Hughes sold the property in 1995 to Coast Savings and the Valley Jobs Recovery Agency, Mayor Richard Riordan’s economic development committee. That ownership group spun off portions of the then-88-acre site, selling 20 acres to DeVry Institute, five acres to the Los Angeles Police Department and 33 acres to a development partnership between Regent Properties and Shamrock Holdings, which is developing the West Hills Corporate Village office park there. Now the property is down to its final 30 acres, on which five office buildings and four “common area” buildings, such as a cafeteria and theater/conference room, are located. Cushman & Wakefield has not yet begun its marketing effort, according to Mike DeSantis, one of the brokers handling the deal. He declined to discuss Home Savings’ asking price for the property. As a result of its acquisition by Washington Mutual Inc., Home Savings will likely be vacating its Irwindale campus as well. Washington Mutual plans to continue operating from Great Western’s former headquarters in Chatsworth. Home Savings leases the 775,000-square-foot Irwindale facility on a 43-acre campus, so Washington Mutual will either find a way out of the lease or sublease the property to another tenant.

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