The Real Deal
01/22/20

Around LAX, Office-to-Hotel Conversions Are Catching On
By Tina Daunt

https://therealdeal.com/la/2020/01/22/around-lax-office-to-hotel-conversions-are-catching-on/

A developer wants to convert a Westchester office building into a 356-key hotel, hoping to get in on the fast-developing area around Los Angeles International Airport.

Miracle Mile Holdings LLC has filed an application with city planning to repurpose the 455,000-square-foot building at 5240-5300 West Century Boulevard. Records show the seven-story, glass property was acquired for $11 million in 2001.

On Tuesday, Shuhab Ahmed — acting on behalf of Miracle Mile — filed a permit for the yet-unbranded hotel. The plan includes 6,000 square feet of ground-floor commercial space. A representative for Miracle Mile declined to comment.

The building now houses a mix of commercial businesses. It had previously been marketed as a possible corporate headquarters. But with property owners struggling to lease empty office space in the area, the incentive to convert structures into hotels is becoming more attractive, said Alan Reay, founder of brokerage firm Atlas Hospitality Group.

“This is a big trend along Century Boulevard,” Reay said. “We’re seeing this happening with a lot of properties where the office rental market has been stagnant, particularly around LAX.” He added it was less expensive to convert an office building near the airport than to build on an empty lot.

The LAX-area hotels are already operating at an 87-percent occupancy rate — with rooms going for an average of $145 a night, Reay said. One room can net more than $42,000 a year, he said.

Now, with the multibillion-dollar SoFi Stadium and entertainment complex under construction in nearby Inglewood, and the multibillion-dollar overhaul around LAX, the area’s hotel market is on the upswing. And conversions plans are plentiful.

Hyatt is building a 129-room Hyatt House and a 272-room Hyatt Place from a 13-story office building at 5959 W. Century Boulevard. A 178-key hotel is also being planned for a mid-century office building near the airport on South Sepulveda Boulevard.