Exclusive Q&A with LA Real Estate Mogul Rick Caruso
Rick Caruso, founder and CEO of Caruso Affiliated, is well-known in SoCal for developing high-end retail destinations and, more recently, ultra-luxury apartments with concierge services similar to a five-star hotel. Now he's using his experience to bring premium services and amenities to the creative office market at the Masonic Temple (W.E. O'Neil Construction) in Glendale and create unique experiences for visitors to California's first five-star, beachfront hotel in Montecito.
Bisnow: With the Masonic Temple project, it’s obvious you’re taking creative office to the next level by leveraging Americana At Brand to provide tenants amenities and services tailored to individual needs. Do you have any other projects like this in the works?
Rick Caruso: We’d like to do more projects like this. It’s a nice, good way to create interesting office projects when retail is already embedded in the location. We’re looking for more acquisition opportunities around our other retail properties—The Grove (West LA), The Commons (Calabasas), The Promenade (Westlake) and Glendale (Americana at Brand)—suitable for conversion to creative office.
Bisnow: The Masonic Temple was in pretty bad condition when you bought it. What were the greatest challenges to making this place habitable, particularly in light of CBRE’s short time frame for moving in?
Rick Caruso: The Masonic Temple had been vacant 50 years. There were no systems—air conditioning or plumbing. There wasn’t much in the building at all, except a few dead pigeons and rats. It had to be entirely gutted and rebuilt. There was an enormous amount of structural work required because we wanted to install large windows. And then there was the historic nature of the building. So it was a very complicated project.
Our head of construction, Tom Veje, said he could get it done in time, and I have great confidence in him and his team. And Gensler really stepped up to the plate. We ended up with an enduring building, with beautiful old wood ceilings and beams, which will be a Class-A office tower with historic architecture.
Bisnow: Will there be other tenants at the Masonic Temple besides CBRE?
Rick Caruso: I think CBRE wants the balance of floors. They’re so excited about moving here, chances are they will take it all, except for the ground floor, where we’re putting in a very popular Westside fine-dining restaurant.
Rick Caruso: I’d like to do more in the Marina. Our Waterside (4700 Admiralty Way) project is highly successful. It is producing strong returns. The Marina is a real solid area. The Fisherman’s Village project is not within our control. We’ve had discussions with the leaseholder, but he hasn’t made a decision.
Bisnow: The Palisades Village shopping district has been around since the 1920s. Are you restoring the old structures and re-tenanting the project like you did at Waterside in the Marina? What’s involved in this project?
Rick Caruso: We have 100k SF of new buildings going in. We bought the whole area and are tearing down existing buildings to create a charming coastal village that’s basically akin to The Hamptons. The old buildings were suffering from deferred maintenance. Some stores even had to close because the former owner didn’t do needed upkeep. With new construction, we now have an opportunity to increase parking and put it underground.
But we are bringing back the historic Bay Theater. We found the original drawings of the Marquee and are really excited about that. This project will add to the quality of life in the Palisades. People living in the area will be able to walk there to dine and see a movie.
Bisnow: Like 8500 on Burton, 333 La Cienega is a very high-end luxury project. It is difficult to fathom high demand for apartments that rent for up to $9/SF. Can you tell us about the demographics of tenants you expect to live here based on 8500?
Rick Caruso: We’ve had a waiting list for 8500 since we opened the door. There’s a lot of demand for high-price, luxury apartments because there’s so little of this caliber of product available. People really love the unparalleled amenities and service. We operate 8500 like a five-star hotel. The concierge service does everything for you: grocery shop, full-time car and driver, walk the dog—just about anything desired. We’re providing the same type of service at Masonic Temple, and we do it for our own employees too.
Bisnow: What do you have planned for the 200 acres you acquired in Carlsbad? That’s enough land for a master planned community.
Rick Caruso: We bought more than 200 acres on a beautiful lagoon and will dedicate 176 acres to permanent open space, which will have three miles of trails along the waterfront. We’re building an outdoor retail promenade, anchored by Nordstrom, on the other 26 acres.
Bisnow: You’re also building a resort in Montecito. This is a new category of real estate for you. Why did you decide to get into the hospitality business?
Rick Caruso: We’re building the only five-star hotel (Rosewood Miramar Beach Montecito) on a beach in Southern California. We plan to break ground in March or April next year and will open in 2018. I’m really excited about this project. We are already very much in the hospitality business. This is just an extension of what we do at our other projects. The hotel’s concierge service will provide services similar to what is provided at Americana on Brand and 8500. We'll offer people unique experiences. This project will reinvent how people use a resort and how a resort operates.