Capitol Records Inc. has informed city officials that parent company EMI Group PLC could sell its historic Hollywood building and surrounding campus.
Mayor Antonio Villaraigosa and Council President Eric Garcetti have already contacted executives at Capitol Records and EMI Group in hopes of keeping the recording company and its roughly 160 employees in Hollywood.
Villaraigosa has called EMI executives several times, offering to come up with public assistance to help the recording company remain in its landmark tower north of Hollywood Boulevard on Vine Street.
“Capitol has told city officials that they have received various offers,” said Helmi Hisserich, head of the Hollywood office of the Community Redevelopment Agency of Los Angeles. “We are working diligently on keeping Capitol Records in Hollywood, where we think they want to be located.”
EMI spokeswoman Jeanne Meyer confirmed the company had received offers but insisted the building wasn’t being actively shopped on the market.
“We have received some proposals and it’s our responsibility to review any serious offer,” she said. “It’s no secret that every property owner in that area has been getting offers.”
Meyer said EMI could sell the Capitol Records building if the company could lease back the property for a period of 10 to 15 years. Under that scenario Capitol Records would continue to operate at the site.
Several reasons are driving EMI’s decision to consider selling its historic Welton Beckett-designed property, which resembles a stack of records and doubles as an icon for the label.
Lower revenues, stemming from music piracy to lackluster CD sales, have forced EMI executives to consider ways to pare down overhead.
The company has already sold off several of its CD and DVD manufacturing and distribution subsidiaries, though in each case EMI entered into long-term service contracts with the former units.
“We’re basically taking in the reality of the music business,” Meyer said. “We’re focused on information technology now, and we’re rapidly transforming into digital business with a digital product.”
EMI executives have also expressed frustration that many of the buildings near its property are being converted into condominiums. There are about 160 units coming online during the next year at Hollywood and Vine, and developers are planning a 10-story residential project across the street from Capitol Records at the former KFWB radio station.
Real estate brokers believe the Capitol Records building could fetch around $50 million or more, depending on whether the city would allow the historic structure to be converted into condominiums.
Garcetti spokesman Josh Kamensky said the council president had written a letter to Capitol Records that ruled out allowing the building to be converted into housing. He said the city’s adaptive reuse ordinance, which allows similar conversions, only applies to non-functional office buildings.
“The object of the ordinance was to find new uses for abandoned, obsolete buildings,” Kamensky said. “It would be hard-pressed to make that finding with the Capitol Records building, which is 100 percent leased.”
This wouldn’t be the first time city officials had to fight to keep Capitol Records in Hollywood. Six years ago, the city council invested $4 million to help renovate and expand the company’s West Coast headquarters in order to prevent Capitol Records from leaving Hollywood.
At the time, private firms also pledged $29 million to renovate the Capitol Records building, constructing a parking garage and other nearby projects to allow the company to expand. However, the parking garage and other expansion projects were never completed.
City officials are hopeful that if EMI sells the property, it will be to a developer who will finish the Capitol Records expansion.
“Having Capitol Records stay and expand in Hollywood has always been a priority for the city and the redevelopment agency,” Hisserich said.
