Gym Operator Equinox Picked to Run Hotel in Grand Avenue Project

A rendering of the $850 million project proposed for Grand Avenue.

DOWNTOWN LOS ANGELES — Angelenos know Equinox as a high-end gym in which they can sweat. In a few years, they may also know it as a luxury Downtown hotel where they can spend the night.

Executives with developer Related Cos. this morning announced that they intend to have Equinox operate the approximately 300-room hotel in the $850 million project that will reshape the northern edge of Grand Avenue on Bunker Hill. In a presentation to the Grand Avenue Authority, the joint city-county panel overseeing the project that will rise on publicly owned land, Steve Eimer, a Related vice president, said it would be the first Equinox hotel in Los Angeles, and the second one overall, following a hotel in the Hudson Yards project in New York.

Under questioning from County Supervisor Hilda Solis, chair of the Grand Avenue Authority, Eimer acknowledged that Related is a significant investor in Equinox. The company has 75 health clubs around the world, and has been in Los Angeles for 15 years. There is an Equinox in Downtown at 444 S. Flower St.

Ken Himmel, president of Related Urban, was enthusiastic about the potential.

“We are thrilled to partner with Equinox for this key part of the Grand Avenue redevelopment,” he said in statement to Los Angeles Downtown News. “The Equinox branded hotel is a bold, lifestyle experience with world class design, restaurants, and amenities and sure to become a Downtown Los Angeles destination. Having the right hotel flag identified is another great step forward and consistent with our overall vision for the redevelopment.”

The high-rise hotel would be one of three major components of the project being designed by Frank Gehry. The Grand, which would rise on what is known as Parcel Q, across the street from Walt Disney Concert Hall, would also contain a residential skyscraper, with an estimated 380-450 units, and a large retail and restaurant component built around a central plaza that opens to Grand Avenue.

Equinox recently announced its intention to expand into the hotel business after almost a quarter century in the fitness industry. The company will work with design firm Yabu Pushelberg on the projects.

Company CEO Harvey Spevak noted that Equinox has been in Los Angeles since 2001, and said the city has been a “key market” for the brand.

“We are excited about the prospect of bringing an Equinox-branded hotel to the area and to be a part of the Grand Avenue redevelopment that will continue the renaissance of Downtown,” Spevak said in an email to Downtown News. “As a fitness and lifestyle leader, a luxury lifestyle hotel is a natural extension of our brand and will be a compelling and unique offering in Los Angeles."

The Equinox would replace an SLS-branded hotel in The Grand. In November 2013, Related announced that it had partnered with SBE Entertainment and its owner, Sam Nazarian, to be a financial partner in the project and operate the SLS hotel. However, this past January, Related elected to move forward without SBE and Nazarian. No explanation for the split was given, though it followed some well-reported troubles that Nazarian experienced in December when trying to get a gaming license for an SLS Hotel in Las Vegas. The license was granted, but Nazarian agreed to step back from the hotel and let a partner take over.

Equinox has never opened a hotel, and its first one would be in the New York project, also being developed by Related. That is expected to come online in late 2018. The Downtown Equinox would open “shortly thereafter,” according to a letter Eimer provided to the JPA.

The lack of an Equinox track record raised concerns for City Councilman José Huizar, whose 14th District includes Downtown Los Angeles.

“I have some tough questions for Related as to whether this is the right fit or not,” Huizar told Downtown News after the JPA meeting. “It’s an unproven hotel operator, and if we want to maximize the opportunity before us, we have to make sure this is the right fit.”

The questions, he said, concern what kind of outreach the hotel would do, and what kind of guests they would target. He also expressed an interest in the company’s financial status.

This is the latest turn for a project originally announced more than a decade ago. Related initially hoped to have the first elements open in 2011. Initial plans called for luxury brand Mandarin Oriental to operate the hotel, though that, and the entire project, was stymied by the onset of the recession.

Huizar referenced the previous hotel partners when raising additional concerns.

“When we had the Mandarin Oriental, there was a certain clientele they serviced. The SLS had a certain clientele, and we kind of knew what to expect in terms of the guests arriving to Bunker Hill,” Huizar said. “Equinox, you have your gym clientele. Now can they translate that to a hotel space? I’m not completely sold, but we have to have a sit-down again with Related.”

In addition to the hotel operator, Eimer said that Related continues to try to raise $250 million to $300 million for the project. He noted that Related is working with the company Macquarie Capital, and that presentations have been given to more than 50 potential investors, among them insurance companies, pension funds and sovereign investment vehicles.

He said several entities have expressed interest, and Related is narrowing down possible investors. He said the company expects to pick an equity partner in 30-45 days.

Eimer also revealed the first two retail tenants: an Equinox gym, and a Soul Cycle.

He said Related has hired a team to find retail and restaurant tenants for the project. Solis said she wants The Grand to be accessible in terms of price point and variety of shops and restaurants. Eimer said that would happen, and though he noted that Related is targeting some contemporary fashion brands not currently in Downtown, he also promised there would be diversity between chain and independent shops.

“Our goal is to populate the project not only with global brands, but local, L.A.-based brands,” he said.

Related officials have said they hope to start construction in 2016.

regardie@downtownnews.com

Copyright 2015 Los Angeles Downtown News