Caruso beach-bound with deal to buy Marina Waterside lease.

CARUSO Affiliated Holdings LLC, developer of the Grove and the Calabasas Commons, has purchased the lease for the Marina Waterside Center in Marina del Rey and plans an $11 million rehab.

Caruso bought the lease interest from Boston-based Carlisle Realty Holdings for an undisclosed amount and has negotiated new terms with the county, which owns the ground at 4745 Lincoln Blvd.

The new deal, approved by county supervisors on Dec. 16, calls for Caruso to pay $750,000 annually, $10,000 above what Carlisle paid, for the first five years, plus a percentage of gross revenues.

Roger Moliere, asset development chief of the county's Department of Beaches and Harbors, said Caruso also agreed to upgrade the center every 15 years. In return, the county extended the remaining 20 years on the shopping center's lease by 39 years, he said.

Carlisle has held the lease since 1988, when it bought the interest from Benequity LLC, which built the shopping center in 1964.

The Marina Waterside Center is anchored by a Ralphs supermarket and has about 30 smaller tenants. Rick Caruso, Caruso Affiliated's president, said the supermarket will be upgraded to a Ralphs Fresh Fair and expanded by 30,000 square feet. Caruso also plans to combine some of the smaller storefronts to create larger spaces for national retail tenants.

Toy Shopping

Caruso is on the prowl for a tenant to replace bankrupt FAO Inc.'s store at the Grove in the Fairfax District, the only FAO Schwarz in California.

Caruso didn't say how well the Grove location did, but was just as happy to get rid of a weak national operation.

"I learned a long time ago when you have a bad retailer the sooner they close the better," he said. "We have already had a lot of people contact us about that space but we are going to take our time picking the right retailer for that location."

Flight of Fancy

The owner of the Radisson Hotel Los Angeles Airport plans a major expansion of the property, despite lukewarm demand for air travel and possible disruption from a pending massive overhaul of LAX.

LAX Hospitality LP, owned by San Diego-based Paeifica Cos. Inc., has been given the go-ahead by the city to add 180 rooms and more than 2,500 parking spaces to the 600room Radisson.

Ashok Israni, president and founder of Pacifica, did not return calls seeking comment.

But Kevin Keller, planning deputy for City Councilwoman Cindy Miscikowski, whose District 11 includes LAX and surrounding communities, said the council and Mayor James Hahn approved the project in November and the entitlements became effective Dec. 29.

Craig Lawson, president of Craig Lawson & Co. LLC, the land-use firm that guided the project through the two-year approval process, said plans called for two towers. One would include 180 suites on five floors, plus five floors of parking. The other would be a six-floor parking structure, which would be used for offsite airport parking.

The parking structure would likely be built first because it offers a more immediate return on investment and would provide needed parking while the suites were under construction, Lawson said. He said the company could start building the parking structure within eight months.

Construction cost estimates by industry professionals ranged from $130,000 to $175,000 per room for the suites and from $7,000 to as much as $25,000 per stall for parking.

"That's a pretty bold move in that market," said Ron Silva, president and chief executive of San Francisco hotel management and financing firm Fillmore Capital Partners. "They must be betting the airport market is going to bounce back in a big way, but I just don't see it."

Hotels in the submarket were expected to finish 2003 with an average occupancy of 71.1 percent, a modest 2.4 percent increase over the year earlier. Room rates, however, declined 5. I percent to $70.10 in the same period, according PKF Consulting.

"Adding the parking makes sense," said Art Buser, managing director and head of West Coast operations for Jones Lang LaSalle Hotels. "But even in its heyday, the LAX area hasn't needed more rooms."

Gap Gap

Gap Inc. closed its Westwood Village store on Dec. 24. The store's windows are papered over, and the company planned to have its merchandise out of the building by Dec. 31. The move is a blow to Westwood Village, which despite plans by Urban Outfitters Inc. to open a store there in February has had trouble attracting and retaining national retailers recently.

Staff reporter Andy Fixmer can be reached by phone at [phone], ext. 263, or at [e-mail].