Phase One of LA Mixed-Use Project Closer to Getting Underway

The long-awaited, South Los Angeles redevelopment project known as Marlton Square is set to move forward with Phase One, following the purchase of 8.65 acres of land by Kaiser Permanente, which plans to develop two medical office buildings at the site. In addition, the seller, Commercial Mortgage Managers (CMM), is also in negotiations with potential developers of a 120k sf retail center on the balance of the 22- acre property. The site is bounded by Martin Luther King Jr Blvd, Marlton Ave, Buckingham Rd and Santa Rosalia Dr; and is adjacent to the Baldwin Hills Crenshaw Mall.

Marlton Square had been part of a $1 bil real estate portfolio that defaulted when USA Capital, the lender, filed for bankruptcy in 2006. As part of ensuing legal complexities, (the largest bankruptcy case ever in the state of Nevada), a court-ordered ‘stay’ was placed on the assets; this halted redevelopment plans. In 2010, the US Federal Court trustee came up with a plan that would allow each property to move forward separately. CMM, the primary investor in Marlton Square, secured the title in August of 2010 and immediately began the work of preparing it for sale. Kaiser was among several potential buyers to express an early interest in the site.

Given the importance of the redevelopment of this property, Mayor Antonio Villaraigosa and Councilman Bernard Parks, worked closely with CMM and Kaiser, reducing to 18 months a process that could have taken years to complete.

“Mayor Villaraigosa and Councilman Parks were instrumental in ensuring that this project got off the ground with finality,” said Mike Mollo, of CMM. “Everyone involved truly came together with the common goal of ridding this neighborhood of the blight that this property had become, and supplanting it with a thriving mixed use environment that will create highly paid jobs, provide value to the community and generate sales and property tax revenue for the City of Los Angeles.”

All structures on the future Kaiser site have now been demolished, and Kaiser is scheduled to break ground next month on its medical office buildings. The remaining unoccupied buildings will be demolished within the next few months.

“Kaiser’s commitment to this community and this project is the lynchpin that will help us finally revive the vision for Marlton Square that had been dormant for so many years. The interest level on the retail site has been incredible and we expect to select a buyer for that portion of the project in the very near future,” said David Rentz, also of CMM.

CBRE’s Jamie Brooks, Dean Haney and David Stromath represented the seller in the Kaiser transaction, and are also representing them in the active retail negotiations.