Developer CIM Group finds limits to building in its own back yard

Major developer CIM Group’s latest U.S. real estate move — a sale of two Los Angeles parking lots — speaks not only to the firm’s strategy of turning obsolete parcels into cash or more profitable uses. It shows how community pushback and financial constraints can shake up long-term building plans.

More than a decade ago, the Los Angeles-based investor known for large-scale urban redevelopment snapped up a collection of aging office buildings and surface lots along the high-profile thoroughfare of Wilshire Boulevard. Its goal was straight-forward: turn an outdated corporate campus into a mixed-use neighborhood.

Now, the firm finds itself cashing out of one of the final redevelopment pieces of the former Farmers Insurance campus. The move both monetizes the land and reflects how difficult it has been to bring that vision to life.

The region’s “regulatory environment and high construction and labor costs have made it prohibitive for new developments, especially affordable housing,” said CoStar Director of Market Analytics for Los Angeles Catherine Yeh. “Entitlement risks have skyrocketed in recent years when considering all the regulations and permitting times required.”

CIM Group had once envisioned turning the roughly five acres along Wilshire Boulevard into a sweeping development with homes, apartments and open space. But a bevy of market realities — ranging from community resistance to a lack of partners willing to take on projects in a time of relatively high interest rates — forced CIM Group to pivot and instead take on the redevelopment in a piecemeal fashion.

The campus sits where Wilshire Boulevard’s transit-heavy corridor meets the low-rise residential character of Hancock Park. A redevelopment, CIM Group hoped, would align with city goals to concentrate density along major streets while preserving surrounding neighborhoods.

The plan proved to not be an easy feat, a struggle that's not uncommon among developers in similar situations throughout California.

CIM Group was forced to go back to the drawing board "after extensive community feedback," the developer has said in public filings. The concerns ranged from traffic and power use to the number of homes planned.

Later revisions scaled back the project — including eliminated commercial uses such as office and retail — to "sensitively address community comments," resulting "in an improved residential plan for the property in the prestigious Wilshire Corridor," CIM Group executives said in one of several presentations to local neighborhood associations.

The project’s units would all be sold at market rate, excluding low-income units, and target "Hancock Park move-down buyers,” or more mature residents looking to downsize from larger homes in the area.

“These are not condos for millennials,” said CIM Group's Clyde Wood in one of those meetings, according to local reports. “They are very heavily amenitized.”

The developer has since found some success repositioning parts of the site, but it is now effectively handing over control of the parking lot portion to a more bullish homebuilder. CIM Group did not share specifics about the deal with CoStar News.

CIM Group sold the parking lots spanning two acres at 4622 Wilshire Blvd. next to its corporate headquarters in Los Angeles’ Hancock Park neighborhood to Richmond American Homes, a Denver-based homebuilding division of Sekisui House, in a March sale.

The deal brings in a builder with ground-up residential expertise to advance the site; the firm has been expanding its Southern California holdings with for-sale housing communities in Valencia, Long Beach and San Pedro.

CIM Group is not alone in California, where "the dirt is expensive, and the regulations make it more expensive," Deborah LaFranchi, CEO of housing financing company SDS Capital Group, has told CoStar News.

"The time it takes you to get entitled and get through permits just dilutes your returns,” LaFranchi said.

Founded in 1994, CIM Group has grown from a Los Angeles redevelopment specialist into a national real estate and infrastructure investor that has managed more than $60 billion in projects and owns roughly $29.9 billion in real estate.

CIM Group often assembles clusters of neighboring properties in Los Angeles to create larger redevelopment opportunities.

For example, it transformed an aging Hollywood studio lot into the modern Lot at Formosa campus and is planning West Hollywood’s tallest tower on a former concrete plant site at 1000 N. La Brea — both cases where combining parcels unlocked more value.

The firm took a similar approach on La Brea Avenue, reimagining a full block of aging retail buildings into the District La Brea shopping hub.

Last year, CIM Group launched a fund focused on acquiring existing affordable housing and developing new multifamily projects, signaling a broader shift toward strategies better suited to today’s development constraints.

That same playbook has guided CIM’s long-running effort to reposition its Wilshire holdings into rental and for-sale housing — though with more mixed results.

Farmers Insurance originally developed the campus in the late 1930s and occupied it for roughly 75 years before relocating to suburban Woodland Hills, leaving behind a largely vacant complex that opened the door for redevelopment.

CIM Group’s involvement with the Wilshire property dates back to 2014, when it acquired the former Farmers Insurance headquarters campus for about $91 million through a sale-leaseback deal.

The firm bought buildings at 4680, 4700 and 4750 Wilshire Blvd. along with the parking lot at 4622 Wilshire Blvd. — with its plan to redevelop the site into housing once existing leases expired.

The firm initially envisioned a sweeping redevelopment anchored by the preservation of the historic Farmers Insurance tower and the addition of new housing across the site.

After struggling to secure partners and unsuccessfully marketing the portfolio for sale, CIM pivoted to a phased approach — packaging parts of the property as the Wilshire Mullen project and pursuing redevelopment in stages.

That strategy resulted in the conversion of 4750 Wilshire into 68 apartments completed in 2024, while entitlements were secured to redevelop the Art Deco tower at 4680 Wilshire into 65 condominiums — a project that has yet to break ground.

CIM Group ultimately won approvals for the parking lots to be converted into 17 residential condominiums — including nine attached and eight freestanding units — along with six single-family homes. In opting to sell the site, it's now up to Richmond to determine the next chapter of the parcel's redevelopment.

“There are a lot of parcels in Los Angeles that are already entitled, but have sat idle due to challenging financing costs," Yeh said.