by Andrew Asch
Since 1961, Fred Segal has pioneered high-end boutique retail in Southern California, but the retailer’s self-named Fred Segal Inc. is closing a chapter in its colorful history. In a low-profile deal, half of Fred Segal’s popular compound in Santa Monica, Calif., was sold for $41.2 million to DK Broadway LLC.
DK Broadway shares a corporate officer, Matthew Khoury, with KRE Capital LLC, which runs Malibu Village. The high-end retail center counts boutiques for fashion houses Lanvin and Missoni as tenants in its property, located across from the beach in Malibu, Calif. The recent Fred Segal deal took place in May. It was not reported in the press, and the deal did not include the Fred Segal compound at 420 Broadway in Santa Monica or the original Fred Segal complex of boutiques, located at 8100 Melrose Ave. in Los Angeles, which operates under separate ownership. According to property records, 500 Broadway Partnership sold the 500 Broadway building, which spreads over 1.3 acres and 59,000 square feet. Signing the deed to the building was Michael Segal, Fred Segal’s son and the operating general partner of 500 Broadway Partnership. The 500 Broadway building is the site for popular boutiques such as Ron Robinson, Babakul and Fred Segal Finery as well as the perennially busy restaurant Umami Burger at Fred Segal. For the building’s tenants, the news did not make a big splash, said Karen Meena, vice president of Ron Robinson. “It’s all supposed to be the same. It’s just another landlord,” she said.
But the sale of 500 Broadway is another instance of the Segal family looking to leverage and unload some of its properties. During the same month the 500 Broadway building was sold, New York–headquartered company Sandow Media acquired the world rights to the Fred Segal brand for an undisclosed amount. Fred Segal, the legendary retailer himself, is selling his Las Vegas–area estate for $15 million. His Malibu home sold last year for more than $6.2 million, according to media reports.
So far, no plans have been divulged on what DK Broadway LLC plans to do with the property. It has not submitted any proposals to the city of Santa Monica’s Planning and Community Development Department to change the property’s use. DK Broadway’s officers did not return phone calls and emails requesting comment.
Veteran commercial real estate broker Chuck Dembo of Dembo Realty characterized the deal as “patient money,” or an investment that could take its time, perhaps years, before unveiling its future direction. With its beautiful beaches, pier and wide array of boutique retail, the city of Santa Monica has been one of the most popular destinations for shopping, dining, leisure and nightlife in Los Angeles County. Recently, developers have been paying huge amounts for parcels in property in Santa Monica. In February, developer NMS
Properties spent $11.25 million for a parcel that is the address of a Denny’s restaurant at 1560 Lincoln Blvd. in Santa Monica. NMS is well-known for building apartment complexes in West Los Angeles. Santa Monica’s cachet also might have influenced the $41 million price tag for 500 Broadway. In June, the Malibu Lumber Yard retail center was sold for $35.5 million to Glimcher Realty Trust. Malibu Lumber Yard, with 31,441 square feet, is located a couple of blocks away from Malibu Village.
Santa Monica also has earned the nickname Silicon Beach because technology companies are increasingly driving local real estate. Google Inc. has offices in Santa Monica. Other big companies in the city are BeachMint, an e-tailer that sells celebrity-endorsed products, and streaming-video website Hulu. Real estate consultant Larry Kosmont, who served as an assistant city manager for the city of Santa Monica in the 1970s, said technology could play a greater role in the future for the 500 Broadway building. “It would be an ideal location for a high-tech office,” Kosmont said of the 500 Broadway location.
“It’s not really an ‘A’ retail site. It has good visibility from the freeway, but it’s not on Santa Monica’s main retail streets.” Kosmont advises public agencies and private companies as president of Los Angeles–based Kosmont Companies.