Gaw Capital USA and DJM purchased Hollywood & Highland, at the prime Hollywood intersection of Hollywood Boulevard and North Highland Avenue for $325 million a year ago. It was a good buy, considering the 475,000-square-foot retail center draws 25 million visitors a year. Yet, they plan to spend another $100 million to convert the project into Ovation Hollywood, a “reimagined” mixed-use community that will appeal to both tourists and locals alike.

Trizec Properties developed and opened Hollywood & Highland in November 2001, but it faced major challenges out of the gate, including the economic aftermath of 9/11. CIM Group purchased the center for $200 million in 2004 and it underwent a renovation in 2005.

15 years later, DJM and Gaw Capital USA, the U.S. affiliate of Hong Kong-based investment firm Gaw Capital Partners, felt the time was right to make their move. Parton said they could “buy in to incredible cash flow at a great value” and position the center where the market is moving: transit-oriented mixed-use. “The real estate is irreplaceable,” Parton said.

The project was 10 percent vacant when they purchased it, and all of the vacancies were on the top level of the three-story center. The developers will convert the top level to creative office and push retail toward the street, the first and second levels. They’ll also add more food and beverage and bring in more-relevant retailers.

It helps that Gaw Capital was experienced in converting transit-oriented projects to mixed-use in Asia and Europe. “In the U.S., domestic shoppers really do have a tough time going above the second level,” said Parton. “It was interesting to come alongside a group that has been on the front end of this and doing it in another country. A tremendous amount of our customer base is internationals, so we felt that we had the right thesis.”

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Before …

… and after

Rebranding to give an identity

Rebranding was one of the most important elements in DJM’s plan. The shopping center’s name, Hollywood & Highland, was commonly used to describe the intersection or the Metro station there. People didn’t use the term to refer to the center. “We found that more people related to the project based on its adjacencies to the Dolby Theatre [home of the Academy Awards], the TCL Chinese Theatre, other iconic places and the Loews Hotel more so than the place being a brand or an environment that people actually wanted to visit.” The creative team settled on Ovation. “Hollywood is really a city of optimism. It is a city where people come, whether you are a tourist or you are a local, with dreams and ambitions,” Parton said.

DJM aims to attract retail brands that want exposure to a global audience and that will apply omnichannel marketing, those that see stores not purely as places to sell products but also as places to create experiences or showrooms. “We have a phenomenal public space in the interior of the project, so a lot of what we will be doing as we go out to audition brands from around the world is not just about what they can do in their store but how they can use our public space. We want brands that are thinking outside the box, brands that want to do something that you couldn’t do at a conventional mall.”

But the local community factored in, too. DJM held town halls with local residents. “The DNA of every community is very different, and so you have to be able to take a very bespoke approach at every single property,” Parton said. “Engaging that local community is so important. At the end of the day, tourists always want to go where locals are, and so if you can attract the local community and you can create a project that the locals are proud of, the locals will always be your greatest sales force.”

Much of the redevelopment funds will go toward physical design and opening up outdoor space for the office tenants, potentially an advantage in a post-COVID world in which outdoor space will be at a premium.

The developers also are improving the transition from the street into the project itself, one of the center’s prime stumbling blocks. Visitors entering from the hustle and bustle of the boulevard will experience an “oasis” with landscaping, seating areas and major art installations, according to Parton.

The project features a 20,000-square-foot courtyard that, as Parton noted above, will host activations, programming and public events. They’re also redesigning the project’s signature architectural element, a four-story archway that frames the famous Hollywood sign in the distance. And local artist Geoff McFetridge is creating a large mural for the project that invokes the glamour of Hollywood.

Gensler is leading the redesign, and the parties expect to finish the redevelopment in late 2021, as the center celebrates its 20th anniversary.

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