Hermosa Beach’s biggest white elephant will soon become extinct as construction to transform the Hermosa Pavilion into retail and office space, including a 24-Hour Fitness club, began earlier this month.

Property owner Gene Shook, president of Shook Development Corp. of San Juan Capistrano, received his final building permits for the long-awaited project in early June and demolition commenced shortly after. The building, located at 1605 Pacific Coast Highway just north of Pier Avenue, has been defunct since 1999, and is expected to be operational by June 2004.

“We are very excited about this. We think it’s going to be a great product for the community,” said Shook. “We are creating a very different product from what was there before. The dimensions of the building are going to change drastically so it’s like we are constructing a whole other building.”

The Pavilion’s history dates back to the late 1980s when it was built. The center has had many problems with tenant leases and changes of ownership.

In 1988, with AMC Theaters already committed to a lease, the original developer, Dennis Bass, sold the property as a city entertainment plaza comparable to the Century City mall in Los Angeles.

However, the stores never materialized or closed up shop quickly after their establishment. The 67,000-square-foot, two-story retail center stood mostly empty for eight years until in 1996 Shook bought the property from the Federal Deposit Insurance Corporation for $5.25 million. AMC was still one of three tenants in the 28-unit center. Shook bought it in the hopes of converting the building into a center filled with entertainment and restaurants.

In 1999, Shook won approval for his remodeling plan to convert a segment of the center’s space into a health and fitness club that would take the place of AMC Theaters, which left town after 10 years.

Shook received approval on the proposal at both the City Council and Planning Commission levels, but permits for the project lapsed. He then submitted a slightly varied plan in 2001.

Last June, the City Council approved the pavilion’s precise development plan and a height variance to the city’s 35-foot height limit.

Shook requested the variance so that he can now enclose the building’s top floor and eliminate the site’s valet area on the east side of the pavilion by turning it into extra floor space. Shook pushed for the extra square footage on the project to meet the needs of 24-Hour Fitness.

“We are delighted to be a part of this innovative development project in a wonderful community,” said Eric Kelly, senior vice president of development for 24-Hour Fitness. “Our programs and services are member-driven and we are excited about giving people in the Hermosa Beach area the opportunity to get fit in this beautiful new space.”

The building once housed the 26,000-square-foot theater while 46,000 square feet was reserved for retail and restaurant use (totaling 72,000 square feet). It will now be the site of the 45,000-square-foot facility operated by 24-Hour Fitness, the anchor tenant, while an estimated 27,000, 30,000 and about 1,700 square feet are spaces reserved for retail, office and food use, respectively (totaling roughly 102,000 square feet of usable space). Aside from the health club, a new day spa will occupy about 6,500 square feet.

“We changed the entrance and exits of the parking structure so it’s much easier to get in and out of it,” added Shook. “The use of the building is much different from that of the past. With a movie theater, you literally had hundreds of people trying to get in and out of the building in a matter of minutes. But with office employees arriving at working at different times and with health club members working out at different times, the traffic in and out of the structure is significantly less.”

The 24-Hour Fitness club will include an indoor swimming pool and a full-size basketball court. The national corporation recently entered into a 15-year lease contract with Shook, who hopes to attract other tenants to the office and retail space. He hopes to fill up the retail space with small, local boutiques rather than large franchises.

“We would prefer to have merchants in tune with the local Hermosa Beach market,” said Shook. “These businesses would obviously service more than just Hermosa Beach residents like the other local retailers in town, who provide services to a wider area.”