Blog: Eat, pray, close: Canon Drive remains dealmaker central – but will that last?

Josh Flagg, star broker and one of the faces of Bravo’s “Million Dollar Listing,” knows the importance of a prime location. For Flagg, that means maintaining his Rodeo Realty office on Canon Drive in Beverly Hills, and spending some quality time at Spago down the same block.

“We do a lot of deals here,” Flagg said during a recent phone interview from the Wolfgang Puck restaurant, which still commands a power lunch crowd. “It’s good for business — everyone sees each other and they get to talk, mingle.” His life, Flagg added with a broker’s flourish, “revolves around Canon.”

But for other brokers, that stretch of North Canon Drive between Wilshire and Santa Monica boulevards has lost its luster, its heyday come and gone. Once dubbed “Realtor Row” for its concentration of residential brokerages, Canon Drive has undergone a remodel in recent years. Boutique and newer brokerages are moving to neighboring streets like Beverly Drive and Wilshire Boulevard amid rising rents, and agents are increasingly seeking quieter, more secluded places to conduct business.

Luxury estates broker Aaron Kirman, who now works under the Pacific Union banner, is among those who have embraced the shift. “Canon Drive can be a good and a bad,” said Kirman, who worked there for over a decade with John Aaroe Group. “If I’m on Canon Drive with a client, it is probably not the best thing for my client or for me [in terms of] discretion or viewership. If you see 10 real estate agents as you’re having a lunch, it really can take a lot of time away from the intimacy.”

There was a time, not too long ago, when it wasn’t uncommon to spot a broker dining with a star on Canon in a modified version of the Hollywood power lunch. Instead of discussing the next big part, talk would focus on the perfect view.

Joyce Rey, longtime luxury broker at Coldwell Banker, recalls dining with Robin Williams, her client at the time, at Bouchon on Canon. The actor — who died in 2014 — was getting ready to list his 640-acre Napa Valley estate, complete with 18 acres of producing vineyards and a 20,000-square-foot mansion.

Thomas Keller’s Bouchon may have closed in December, but Canon Drive continues to attract attention, she said. Coldwell Banker maintains two offices on the block and Rey, who has worked there for 20 years, said the stretch is still “where the action is as far as real estate goes.”

A Canon diehard

There are few brokers who support that sentiment more than Hilton & Hyland co-founder Jeff Hyland, a Canon Drive veteran of more than four decades. He worked for Coldwell Banker, and the late-Mike Silverman — self-described “realtor to the stars” — before starting his own firm on Canon. Hyland’s now in the middle of moving his company to a 15,000-square-foot space across the street at 257 North Canon Drive, revealing his days on that stretch are far from over.

“It’s the best commercial street in the Golden Triangle,” Hyland said. “There’s a whole evolution and there will be more coming on the street. There is not a minute that goes by that there aren’t 20 people walking on the sidewalk.”

But not everyone shares that opinion.

Boutique brokerages such as the Agency, John Aaroe Group, and Teles Properties chose to set down roots at other locations on surrounding streets, such as Rodeo Drive and Wilshire Boulevard.

Nourmand & Associates, meanwhile, eventually moved out. “I don’t think there’s much of a focus on being on that particular street,” said Michael Nourmand, company president, referring to Canon Drive. A family-run business — his father, Saeed, is founder and his mother, Myra, is a principal and agent — had an office on Canon until 2003, when it relocated to Beverly Drive.

The cost, he said, was a determining factor.

“Canon used to be a little quieter, but now with the [luxury Montage Beverly Hills] hotel and more retail stores, the rents on the ground floor are much more expensive,” he added. “The economics don’t support having a ground-floor space anymore.”

But for Jeff Hyland, the high cost only adds to the cache. Rents for Hilton & Hyland’s new office building start at $7.25 per square foot. Down the block, at 499 N. Canon Drive, rents command just under $6.70, according to LoopNet. That’s higher than at nearby Bedford Drive and Wilshire Boulevard, where prices are about $5 per square foot.

Tom Dunlap, Coldwell Banker’s branch manager at 166 N. Canon Drive, said the increase in rents mean landlords “want us upstairs.”

“They’re trying to keep the [Golden] Triangle retail-friendly and rents have gotten so crazy,” Dunlap added.

Brokers are also seeing benefits in having an address on Rodeo Drive, known for its luxury retail stores such as Gucci, Louis Vuitton and Patek Philippe.

“The international community really recognizes it,” said Kirman, whose office is at 150 S. Rodeo Drive.

But it’s not just rising rents that are sapping Canon’s strength, said luxury residential broker Joe Babajian.

A Canon veteran, Babajian said increasing competition among firms and the inability of many startups to survive in lean years are the reasons why fewer brokerages are able to remain there.

Each hot market brings a flood of new brokerages, said Babajian, who is now with Rodeo Realty, which has an office at 202 N. Canon Drive. “When there was a down market, a lot of them closed or got swallowed up,” he said. “It used to be far more prevalent. We had every single boutique on Canon.”

Consolidation has become a prevailing trend in the world of residential real estate. Last summer, New York-based Douglas Elliman agreed to acquire Beverly Hills-based Teles. And late last year, San Francisco-based Pacific Union, another major player, acquired Los Angeles brokerages John Aaroe Group and Partners Trust.

The power hour

While Canon’s star as “Realtor Row” has faded, its reputation as “Restaurant Row” is still hanging on. And for some brokers there remains the lure of the power lunch, an hour devoted to deal-making, schmoozing and often times, celebrating.

Besides Spago and The Palm, the stretch of Canon still plays host to Il Pastaio, Sugarfish, Mastro’s Steakhouse, e. Baldi and Wolfgang’s Steakhouse.

“I’m almost always near the office at lunchtime because I get a lot of work done across the street,” Hyland told The Real Deal in a January interview. “Whether it’s the Palm or Spago, whatever restaurant on Restaurant Row, I’m there. I’ll meet a client or an agent, and we get a lot accomplished. I find a power lunch to be really helpful and useful because the environment is better.”

But many find the atmosphere anything but conducive to serious conversation. The mingling can often leave little time for deal making, brokers say, or even worse, catch the eye of a rival broker.

“If you want to run into real estate agents, you go to lunch on Canon,” Nourmand said. “I go there to be seen, to run into colleagues and people I know. But I usually try to go more off-shoot for meetings, where you’re not going to see anyone in that industry.”

Even Canon Drive and power lunch evangelist Jeff Hyland plans to set up something more private for his clients.

The firm is building its own restaurant in the new office, and plans to utilize the property’s huge terrace and outdoor space for networking and mingling with clients, without the buzz from Canon. But knowing Hyland’s affection for The Palm, a partner jokingly suggested “knocking out a hole in the wall” between the office and the classic restaurant next door, he said, so “they can just pass the food through.”

Even for those who no longer work on Canon, it still provides a draw.

“Once I changed and came to Rodeo, I really settled,” Kirman said. “But I love Il Pastaio — their pasta will get me back there.”

Source: The Real Deal Los Angeles