Musical chairs in a market with, by some estimates, a couple million square feet of sublease space available can be an interesting game.
Take the recent space-swapping deals made by Metropolitan Life Insurance Co. and Context Integration.
When MetLife decided to move the bulk of its West L.A. office to Irvine, it meant the company didn't need all 72,000 square feet of office space at the Trident Center on Olympic Boulevard.
Context, a Massachusetts-based e-business services provider, was at the same time looking to get out of its 15,000 square feet at 11766 Wilshire Blvd., a building owned by Douglas Emmett Realty Advisors.
David Walsh, senior vice president with the Stone Co., which represented Context, said the company had misjudged its expansion needs and leased more space than it necessary when it signed a five-and-a-half-year lease six months ago.
Context found a likely taker for the space in MetLife, but the deal was complicated by MetLife's corporate policy not to sublease space. So a deal had to be arranged through which Context paid a termination fee to get out of the remaining five years of the lease and MetLife leased the space directly from Douglas Emmett. Walsh said the termination fee was "literally pennies," as the $2.8 million, five-year deal that MetLife agreed to is close to the deal terminated by Context.
Context now is in negotiation for much smaller office space elsewhere on the Westside, and Grubb & Ellis Co., which represented MetLife in the deal, now is looking for someone to sublease the space that the insurance company left in Trident Center. Marty Barkan of Grubb & Ellis said there already is significant interest in that 72,000 square feet, for which MetLife is on the hook for 12 years.Hospital Group Expands
In more sublease news, San Francisco-based Catholic Healthcare West expanded its local operations by picking up 35,000 square feet of space at 330 N. Brand Blvd. in Glendale. The five-year lease, which will accommodate an extension of the organization's existing Pasadena operation, was valued at $5.5 million.
The space was available because offices of General Motors Acceptance Corp. (which had been in 27,000 square feet) and CIGNA Corp. (which had 8,000 square feet) each consolidated at different locations.
The space was not on the market long because its size made it attractive, according to Shaun Stiles of Colliers Seeley International Inc., who represented the landlord, pension fund TIAA-CREF, in the deal.
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