Overture Plans Move to Burbank, Spurning Downtown L.A.

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In a deal worth well over $100 million, Overture Services Inc. a subsidiary of Sunnyvale-based Yahoo Inc. is expected to move its headquarters and about 1,000 employees into a yet-to-be-built Burbank campus, according to a source with knowledge of the deal.


In what could become the year’s largest lease transaction, developer M. David Paul & Associates has signed a letter of intent with Overture for Phase IV and Phase V of its 1.2 million-square-foot Media Studios North office park, sources said.


As reported by the Business Journal in August, Overture had been considering a move downtown to City National Bank Plaza, but it was looking for tax breaks. In part to help woo the Internet search company, Los Angeles City Councilwoman Jan Perry had introduced a measure to cut L.A.’s gross receipts tax for five years for any company moving into the city, an adjustment that could have saved Overture $10 million.


But with the proposal still in committee, Burbank became the favored location for the move from its current Pasadena offices, sources said.


“Downtown and the city of Los Angeles missed a huge opportunity,” said Tom Bohlinger, a senior vice president at CB Richard Ellis Inc., who isn’t connected to the deal. “At a minimum the city should have bent over backwards to help make Thomas’ deal the most economical. It would have turbocharged the recovery of downtown L.A.”


Perry shrugged off losing Overture, saying it would be wrong to focus on attracting one company rather than more industries downtown.


“What I see here is a company, Overture, interested in coming downtown, and I tried to look at that in a broader context,” she said. “If they wanted to come here, maybe there are others like them. And I believe that to be true.”


She said passing a tax reform package, including her proposal, would go a long way toward helping the city’s landlords stay competitive with cities such as Burbank and Glendale that have lower tax rates.


Officials with Santa Monica-based M. David Paul & Associates didn’t return calls. Overture spokeswoman Gaude Lydia Paez said a company official wasn’t available for comment. And Josef Farrar, the senior managing director at Studley representing Overture, declined comment.


Sources said that the Internet search firm will occupy a 200,000-square-foot building, which could be completed within eight months, and a second 150,000-square-foot building, which could be built in about a year.


At an average Burbank asking rent of about $2.65 a foot, the 10-year 350,000-square foot deal could be worth about $112 million.


“I think it takes Media Studios North up a big notch,” said Bohlinger. “It takes an area that in some folks’ minds was seen as a back-office location and clearly secondary to the premiere Media District.”


Several sources warned that the letter of intent isn’t a binding contract and Overture could still pursue a different location.

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