LOS ANGELES—R.D. Olson Development has purchased a 23,659-square-foot development site in Hollywood, CA from the Baird-Hogan Family Trust, GlobeSt.com reports exclusively. The developer purchased the site for $581 per square foot, a total of $13.8 million, paying $750,000 over the initial asking price. It is the highest price ever paid for a development site in the Hollywood submarket.

R.D. Olsen plans to develop of hotel on the site, which is currently occupied by a 3,882-square-foot Jack in the Box. The Jack in the Box recently renewed its lease for an additional five years, so development on the hotel won't begin until the lease has expired. That will give the developer time to go through the entitlement and planning process.

The seller chose to sell the property because the Jack in the Box had exercised its final five-year lease option. “The question was how far could we push the envelope out because the market is just so strong, and you would hate to have some sort of downward market adjustment over the next two to three years,” John Tronson, principal at Avison Young, tells GlobeSt.com. “We were initially concerned that we were out in front of it a little bit and that a buyer wouldn't want to buy it because they couldn't get into the ground for five years, but the reality is that it usually takes that long to get through the entitlement process and to get building permits and a construction loan.” John Tronson represented the both the buyer and seller along with Steven Tronson, Avison Young VP, who represented the seller, and Thor Lee, who represented the buyer.

The site is in a prominent location on Sunset Blvd. near the ArcLight Cinema, CNN Tower, Amoeba Music and the Sunset Media Center, and for this reason attracted a lot of interest and the phenomenal sales price. “We got as much interest as you would want,” says John Tronson. “We try not to go wide with listings like this because it attracts an inordinate amount of buyers that you do not know. We went out to 15 developers and 10 engaged. I was shocked at the level of interest.”

The record sales price is indicative of the strong development activity in the Hollywood submarket, which John Tronson explains has been ongoing for the past 20 years. “In older markets like this, with a lot of chopped up pieces of property, it takes a long time to assemble large enough pieces of land and to go through the very arduous entitlement process, but the market has finally hit its stride,” he says. “There are numerous large-scale products coming out of the ground with dozens already completed and dozens more in the pipeline. It is a tremendous market right now with a lot of momentum, and that is reflected in the price that we got.”