IN THE LOS ANGELES ARTS DISTRICT
www.cbre.com/fordmotorfactory
2030-2060 East 7th Street
821 South Santa Fe Avenue
2053 Violet Street
offering memorandum
E xclusively Listed By
Brandon Gill
First Vice President
Lic. 01232330
+1 213 613 3754
John Hillman
Vice President
Lic. 01223571
+1 213 613 3755
Greg Stanton
First Vice President
Lic. 00811874
+1 213 613 3757
Confidentiality Agreement
CBRE, Inc. operates within a global family of companies with many subsidiaries and/or related entities (each an “Affiliate”) engaging in a broad range of commercial
real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development.
At times different Affiliates may represent various clients with competing interests in the same transaction. For example, this Memorandum may be received by our Affiliates, including CBRE, Inc. or Trammell Crow Company. Those, or other, Affiliates may express an interest in the property described in this Memorandum (the “Property”)
may submit an offer to purchase the Property and may be the successful bidder for the Property. You hereby acknowledge that possibility and agree that neither CBRE,
Inc. nor any involved Affiliate will have any obligation to disclose to you the involvement of any Affiliate in the sale or purchase of the Property. In all instances, however,
CBRE, Inc. will act in the best interest of the client(s) it represents in the transaction described in this Memorandum and will not act in concert with or otherwise conduct
its business in a way that benefits any Affiliate to the detriment of any other offeror or prospective offeror, but rather will conduct its business in a manner consistent with
the law and any fiduciary duties owed to the client(s) it represents in the transaction described in this Memorandum.
This is a confidential Memorandum intended solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition
of the Property. This Memorandum contains selected information pertaining to the Property and does not purport to be a representation of the state of affairs of the
Property or the owner of the Property (the “Owner”), to be all inclusive or to contain all or part of the information which prospective investors may require to evaluate
a purchase of real property. All financial projections and information are provided for general reference purposes only and are based on assumptions relating to the
general economy, market conditions, competition and other factors beyond the control of the Owner and CBRE, Inc. Therefore, all projections, assumptions and other
information provided and made herein are subject to material variation.
The Potential Purchaser hereby indemnifies and holds harmless CBRE, the Owner, and their respective affiliates and successors, and assigns against and from any loss,
liability or expense, including attorney’s fees, arising out of any (1) breach of the terms of the Agreement by the Potential Purchaser or any Related Party, and (2) claim
or claims by Potential Purchaser or any of their representatives for commissions, fees and other compensation for the sole proposed sale of the Property to the Potential
Purchaser. The Potential Purchaser acknowledges that the Property has been offered for sale, subject to withdrawal from the market, change in offering price, prior sale
or rejection of any offer because of the terms thereof, lack of satisfactory credit references of any prospective purchaser or for any other reason, whatsoever, without
notice. The Potential Purchaser acknowledges that the Property is being offered without regard to race, creed, sex, religion, or national origin. If after reviewing this
Memorandum, you have no further interest in purchasing the Property, kindly return this Memorandum to CBRE, Inc.
TABLE OF CONTENTS
EXECUTIVE SUMMARY
The Offering..........................................................1
Offering Summary..................................................2
The Property
History...................................................................4
Property OVERVIEW.................................................6
Parcel Map..............................................................7
SITE PLAN.................................................................8
Floor Plans...........................................................9
LOCAL AERIAL.........................................................15
REGIONAL AERIAL....................................................16
The Market
Downtown Los angeles......................................17
Arts District.........................................................20
Analysis
MULTI-HOUSING Overview......................................23
OFFICE Overview...................................................28
New Developments in the Arts District................31
Conclusion
Offering Summary................................................32
executive summary
An irreplaceable piece of American real estate is now for sale.
The former Ford Motor Factory is an entirely unique ownership
opportunity, combining its rich historical significance with the
benefits of one of LA’s hottest neighborhoods.
The property is, quite literally, one of a kind. It’s the last
remaining large redevelopment prospect in the area, a rare
chance to reinvent an iconic structure. Some of the diverse
potential uses for the property include creative office, eclectic
retail and/or residential to meet the growing demand.
The Ford Motor Factory is unlike any offering on the
market today. Its charming original aesthetics are the ideal
palette for contemporary detailing and sustainable elements.
Combined with the momentum of the Arts District, the building
satisfies both the right and left brain – a fun, inspired
purchase with tremendous upside.
A Birthplace of American Ingenuity
This property has a distinct position within the narrative of developing Los Angeles. It all started in 1914, when Henry Ford
started producing Model T’s out of a factory in downtown Los Angeles. The company chose this location specifically in order to
meet rising demand as the city experienced a period of significant growth.
Since its inception, the building has housed innovators from Lockheed Aircraft to American Apparel. And now, it is poised to
lead the Arts District into its most dynamic era yet.
Located In One of LA’s Fastest-Growing Neighborhoods
The Arts District is evolving into an eclectic LA hot spot. With two major residential projects currently under development, the
neighborhood has experienced an influx of attention and investment. This is combined with the larger downtown Los Angeles
renaissance, a $20 billion makeover that has catapulted the area to global real estate superstardom.
With Accents of Yesterday
High ceilings and original elements combine to evoke the past in a way that makes the building entirely unique from its peers.
The Ford Motor Factory is poised to become a modern destination with incomparable historical character.
And Redefined For Today
Los Angeles residents are demanding more of the places they choose to spend their time. In order to attract today’s
sophisticated consumer, a development has to meet a diverse scale of needs all in one place.
the property
Pr opert y History
In 1914 the Ford Motor Company began production of the famed
Model T automobile in the 5-Story building at 7th and Santa
Fe. Henry Ford’s dream and determination to mass produce a
car for the ordinary man had become a reality here in Southern
California. Ford was the first company to assemble cars in the area.
Recognizing that Los Angeles was consuming more cars per capita
than any other region, Ford expanded the plant in 1923. The 90,000
square foot two-story building running along Santa Fe was able to
increase production to 300 cars daily and employ 1,100 workers.
In 1927 Ford ceased production of the Model T and began
production of the Model A. Nearly 80,000 Model A’s were
assembled here in 1928 and 1929 before the plant was closed
and Ford relocated to a larger facility on the water in the Port
of Long Beach. Other tenants and owners of the property since
Ford have been, United States Rubber Co., Lockheed Aircraft,
Bullock’s, Imperial Toy and American Apparel.
Construction Begins
1912
2-Story expansion is built
1914
5-Story section opens.
Model T production starts
1923
1927
Model A production begins
1928
Model T production stops
1929
Plant closes
Lockheed Aircraft leases building
during war effort
1941
1946
Bullock’s Department Stores
purchases property
Present day
Imperial Toy Corporation
purchases property
1968
2008
American Apparel
The Property
4
Pr opert y Overvie w
Building Size:
300,542 SF
APN:
Total Land:
173,804 SF
Clear Height:
Year Built:
Construction:
1912, 1923, 1988, 1996
Loading:
5166-013-009, 5166-013-007, 5166-013-006, 5166-015-018
Ranges From 10 - 30 Feet
Dock High Loading and Ground Level
Poured Concrete, Block , CTU
Zoning:
M3
Number of
Buildings:
4
Parking:
Two Secure Fenced Yards
Number of
Stories:
1-5
Frontage:
318’ x 643’
The Property
6
Par cel M ap
SANTA FE AVENUE
The Property
7
the market
downtown los angeles
Downtown Los Angeles
is Booming
Investors are serious about Downtown Los Angeles. The city’s
renaissance, which began in the mid-1990s, has accelerated, with
over $20 billion invested into the Downtown market in the last
10 years. This internationally recognized tourist destination has
undergone significant growth in the residential and retail
sectors in the last decade as well; and the hotel market continues to
expand to meet the growing demand of over 10 million non-local
visitors annually.
Downtown Los Angeles is one of the hottest development
markets in the country. This is fueled by a number of factors, including an influx of high-income residents flocking to award-winning
restaurants, a growing number of cultural, entertainment and
performing arts venues, a powerful business district and some of
the world’s finest sports franchises.
The Market
17
From the bright lights of L.A. Live to the excited whispers anticipating the next world-class restaurant opening, Downtown’s fabled
streets and historic buildings are transforming into a modern-day metropolis. Even with the recession of 2008-2010, Downtown
has continued its growth in the residential, hospitality, entertainment and business sectors. Since 2006, the market has benefited
from:
37% Increase in Downtown residency
20% Growth Among Major Branded Hotels with the Addition of Over 1,000 Rooms
Approval of the Proposed NFL Stadium, Farmers Field
Completion of Major Entertainment Sites, Including LA Live and One Santa Fe
For investors to fully capitalize on Downtown’s favorable demographics, improving market conditions and intensifying demand,
the time to strike is now.
Over $20
$1,316,900,000
Arts & Entertainment
$2,462,700,000
Civic & Institutional
$759,000,000
Commercial
Invested In
$7,694,133,647
Mixed-Use
Downtown LA
$4,609,600,000
Residential
$3,207,000,000
Transit
Billion Has Been
Over The Past
Decade
$20,095,633,647
Includes financing for projects starting or approved for construction through 2013.
Source: Downtown Center BID
6.39%
3.87%
4.68%
5.40%
2.60%
6.28%
15.83%
12.14%
10.73%
0.26%
2012
-5.09%
$9,213,781,118
$9,030,845,311
$8,851,402,207
$9,326,410,136
$9,301,781,581
$8,695,487,916
6.97%
2011
2010
2007
$7,853,144,506
$7,002,900,943
2009
2006
2005
$6,045,596,904
$5,688,391,189
118.78%
2008
2004
2003
$5,544,496,087
$5,260,525,694
$5,025,431,988
2002
2001
7.99%
2000
$4,838,421,305
$4,480,598,392
$4,21,364,587
1999
1998
1997
This movement is reflected in property values, which have consistently risen since 2010 in a trend that shows no signs of slowing.
Property Value Increases From
1997 - 2012
2.03%
2.03%
The Arts District
The Next “It”
Neighborhood
A Southern California cultural Mecca, the Arts District is
one of a kind. It’s been there all along, with its distinctive
architecture and a smart, playful and enlightened demographic
base, the neighborhood base has been there for years. Today,
however, investors and developers are taking notice, leveraging
considerable resources toward the area’s reinvention.
The future is undeniable. Between its unbeatable demographics,
progressive attitude and location within the greater downtown LA
transformation, this is a neighborhood on fire.
The Market
20
analysis
Multi-Housing Overview
The Demand for
Housing
in Downtown LA is
Undeniable
Given approximately 500,000 Downtown-based workers but only
±20,000 market-rate residential units, the demand for housing in
Downtown LA is undeniable. The market is responding with a variety
of market-rate offerings, including ground-up projects of all sizes and
cutting-edge adaptive reuse and conversion projects. Many are in
construction and others are just beginning planning.
Analysis
23
Downtown Los Angeles
Population Growth
48,433
43,601
39,537
28,878
18,700
2000
2006
2008
2010
2012
Demographic Profile
of Downtown LA
Residents
The average Downtown Los Angeles resident is one of the most
affluent in all of Los Angeles County who thrives on the fast-paced,
24/7 environment of the new, booming Downtown.
• Overall median income for 2012 was $96,200,
58% above the Los Angeles County average
• 80% have a four-year college degree or higher
Median
Household
Income
In LA Area
Submarkets
Bel Air
Pacific Palisades
Palos Verdes
La Canada
Manhattan Beach
Beverly Hills
Downtown
Century City
Marina Del Rey
Redondo Beach
Playa Del Rey
West Los Angeles
Hancock Park
Culver City
Santa Monica
$207,938
$168,008
$167,344
$148,996
$96,312
$96,312
$96,200
$95,135
$92,763
$92,263
$91,339
$86,403
$85,277
$70,774
$69,013
• 40% use public transit compared to 7% in Greater Los Angeles
• 63% work in Downtown
• Ample disposable income, spending approximately:
- $102.00 per grocery store visit
- $16.00 per lunch
- $28.00 per dinner
Source: Downtown Center Business Improvement District
Analysis
25
Demand for
Residential Units
Downtown Los Angeles exhibited striking resiliency during the
recession and has made outstanding advances as the economy has
continued to recover.
OCCUPANCY. An April 2012 report by USC Lusk Center found that
the multifamily occupancy rate in Downtown LA area rose by
5.3% to 96.8% in 2011. Downtown LA boasts the second-highest
occupancy rate in Los Angeles County, trailing only West
Los Angeles at 97.3%.
RENTAL RATES. Downtown rents were shown to have increased
approximately 4.2% for the full year in 2012. The Lusk study
found that rents increased 6% in 2011 and predicted them to
increase another 9.6% by the end of 2013.
ABSORPTION. Absorption in Downtown has been robust with
the submarket absorbing approximately 1,947 units per
year over the past two years with current occupancy at 97.1%,
according to MPF research.
DOWNTOWN RESIDENTIAL OCCUPANCY TRENDS
Period
Absorption
Occupancy
Last Two Years
1,947 units/year
97.1%
Last Five Years
1,382 units/year
92.1%
Analysis
26
Arts District
Supply Pipeline
#
Project
1
940 E 2nd St.
Total Units
2
900 E. 1st St.
3
Artisan on Second
118
242
38
50
4
Barker Block
5
Barker Block Phase 2
68
6
Beacon Lofts
53
7
Binford Lofts
8
Biscuit Company Lofts
9
Brick Lofts
10
Factory Place Arts Complex
11
Galley Lofts
33
12
Hewitt Street Lofts
39
13
Molino Street Lofts
14
The Mura
190
36
105
21
143
91
15
The Savoy
303
16
Toy Factory Lofts
109
17
1800 Industrial
18
Loft 726
22
19
Seven & Bridge
73
20
Seventh & Santa Fe
21
Seaton & 5th Building
22
811 Traction
10
23
808-820 3rd St.
10
24
Modernica
TOTAL CURRENT INVENTORY
25
Biscuit Company
Lofts
Beacon Lofts
Gallery Lofts
Toy Factory Lofts
6
40
104
9
1,913
Camden
250
438
26
One Santa Fe
27
East Village
320
28
The Commons
472
29
Amp Lofts
180
30
The Walnut
57
TOTAL FUTURE INVENTORY
1,717
TOTAL INVENTORY
3,630
Analysis
27
Office Market Overview
New Sectors Joining
Traditional Core
Downtown Los Angeles is the location of choice for over 13,000
businesses, and that number grows daily. The Downtown LA office
market is the regional hub of Southern California. Encompassing
over 31 million SF, it is the second largest office submarket in the
region.
Downtown LA’s dominance as the commercial financial and cultural
center of Southern California has only intensified over the last 10
plus years - due to the development and expansion of the extensive transportation infrastructure, large concentration of new home
development, and the addition of numerous cultural amenities that
are transforming the area from a 9 to 5 weekday office market
into a vibrant 24-hour community and cultural and entertainment
destination.
Today, Downtown’s influence extends well beyond the region,
serving as the West Coast gateway to Asia, Latin America and the
world’s financial markets. In the United States, only New York City
and Washington D.C. can claim a greater international business
presence. Downtown is home to more than 100 domestic and
international banks, finance and trading companies. Along with the
domestic and international banking companies are headquartered
Downtown.
Analysis
28
The commercial real estate market in Downtown Los Angeles gains its strength and stability from the diversity and balance of
its many thriving industries. The traditional Downtown Central Business District (CBD) user groups - such as government, legal,
professional services, and the international and domestic finance-oriented cluster - continue to anchor the market. At the
same time, industry groups such as educational, healthcare, technology, insurance, architectural/engineering, accounting and
communications industries are growing, particularly in the emerging South Park/Entertainment Districts south of the
Financial District and Historic Core.
Legal
Petroleum
E-Commerce
Other
Communications
6%
1% 1%
6%
Insurance
6%
36%
7%
Professional Services
7%
Government
8%
Financial/Services
11%
9%
Accounting/Consulting
Banking
Market Comparison
for Creative Office
Creative office in Dowtown Los Angeles is still in its infancy and
an emerging market. The majority of the other markets have been
established since the mid 90’s and pre dot-com era.
Markets
NET RENT PSF
San Francisco
$3.75- $4.25
Silicon Valley
$6.50 - $7.00
Santa Monica /Venice
$3.50 - $4.50
Hollywood
$2.75 - $3.25
Culver City
$2.50 - $3.00
Playa Vista/El Segundo
$2.25 - $2.75
Downtown LA
$2.00 - $2.50
Analysis
30
New Developments
in the Arts District
THE LEKRETZ INNOVATION CAMPUS
ONE SANTA FE
Type
Education/Incubator
Type
Location
Clean Tech Corridor
Location
Size
60,000 SF
Size
Lucky Brand Headquarters
Mixed-Use Project
Santa Fe Ave / 1st & 4th St
50,000 SF Outdoor Space,
78,620 SF Offices & Retail,
15,000 SF Grocery Store,
438 Apartments
Type
Creative Office
Location
540 S. Santa Fe Ave.
Size
50,567 SF
Analysis
31
CONCLUSION
Offering Summary
Interest Offered
100% fee simple interest in Ford Motor Factory, a 300,542
gross square foot, mixed-use asset located at 2030-2060 East
7th Street, 821 South Santa Fe Avenue, 2053 Violet Street,
Los Angeles, CA.
OFFERED PRICE
$45,000,000.00
TERMS OF THE SALE
The property is being offered free and clear
BID DEADLINE
Thursday, October 3, 2013
PROPERTY TOURS
Prospective purchasers are encouraged to visit the subject
property prior to submitting offers. Please do not contact
the on-site management or staff without prior approval. All
property tours must be coordinated through the listing team
named in this memorandum.
Conclusion
32
Ford Motor Factory will be for the buyer who can execute a
project that creates its own momentum, truly transforms a
neighborhood, and builds upon its own success. It is a rare
opportunity to combine history with innovation and take new
concepts to the next level of development.
There may not ever be another project like this in
Downtown Los Angeles and the window to be on the forefront
of something great may not present itself for many years.