The owner of the CNN tower in Hollywood has put the landmark office building back on the market, despite the 24-hour cable channel’s indecision over whether to stay.
ScanlanKemperBard Cos. bought the 200,000-square-foot building a year ago with the intention of renovating the ground floor for a retail tenant and re-working the tower’s parking garage.
While the company has moved forward with those plans, the 6430 Sunset Boulevard building’s value has appreciated past where the Portland, Ore.-based real estate investment firm had intended to sell the property after holding it for seven years.
Last year ScanlanKemperBard paid $34 million, or $171 a foot, for the building. However, the comparable Sunset Media tower four blocks east sold two months ago for $260 a foot. At that price, the CNN building would fetch about $52 million.
Shortly after the Sunset Media tower traded hands, ScanlanKemperBard received an unsolicited offer for the CNN building that was above the amount paid for the Sunset Media tower, said principal Bob Scanlan.
That offer didn’t pan out, but it made the firm decide to put the CNN building on the market. “That got our attention,” Scanlan said. “That was when we started thinking long and hard whether we should sell now rather than later.”
Since ScanlanKemperBard bought the CNN tower, leasing rates have risen to $2.30 a foot from $1.70 a foot a month, Scanlan said. The firm is also negotiating with a service-orientated retailer to take the building’s 6,000-square-foot ground floor space for $3.25 a foot.
One question mark: CNN. Turner Broadcasting Systems Inc., a Time Warner Inc. subsidiary that owns the cable news channel, shelved an earlier deal reported by the Business Journal to move the broadcast studios to a 40,000-square-foot space at 6500 Wilshire Blvd. Company executives in Atlanta put the deal on hold to look at more buildings, although they may decide to stay put.
While Turner Broadcasting fiddles with where CNN will go, the Atlanta media company has found a home for its West Coast sales and advertising operation.
The company has inked a 12-year lease to take 25,000 square feet in 1888 Century Park East, according to sources close to the transaction. The deal is worth about $10 million to the building’s owner, a partnership of Beacon Capital Partners LLC and CarrAmerica Realty Corp., the sources said.
Turner Broadcasting’s broker, Robert Chavez of Guardian Commercial Realty, declined comment.
Scanlan said CNN, which takes about 16 percent of the Hollywood building and has naming rights, is paying below-market rent. If CNN departs, a new tenant will probably pay higher rates.
“CNN is a great tenant and we would love to retain them,” Scanlan said. “But with the amount of pressure they put on the building, coupled with the rate they are paying, we think it’s probably a good thing if they vacate the property.”
ScanlanKemperBard hired Carl Muhlstein, a senior director at Cushman & Wakefield Inc., to market the property.
Headquarters Hopping
Teledyne Technologies Inc. is moving its headquarters to El Segundo in a deal valued at around $30 million.
The company is leaving its West L.A. offices for a 125,000- square-foot office building at 501 Continental Blvd., which was acquired earlier this year by Denver-based Alliance Commercial Partners LLC.
Teledyne, an electronics maker largely for the defense industry, is departing from 12333 W. Olympic Blvd., where the company has been headquartered for nearly 50 years.
Moving to the South Bay allows Teledyne to be closer to defense industry companies, many of which are its clients. Raytheon Co. previously occupied the two-story building where Teledyne is moving.
Alliance Commercial Partners paid $28.5 million in April for the El Segundo Research Center that consisted of 501 Continental Blvd., which was empty, and a fully-leased 80,000-square-foot building at 1940 Mariposa Ave.
Alliance, a real estate investor that seeks out underutilized buildings to lease up, sold the occupied building to Legacy Partners Inc. for $15.4 million and renovated 501 Continental Blvd.
Teledyne was represented by Mark Sullivan, executive vice president and regional manager of Studley, and the landlord was represented by Trammel Crow Co.’s Steve Soloman and Craig Myer.
Branching Out
Gerding/Edlen Development Co. LLC is under contract to buy a 2.2-acre site on Wilshire Boulevard in Koreatown.
The Portland, Ore., development firm is buying two buildings, each two stories with ground-floor retail and offices on top, that spans the south side of Wilshire Boulevard between Vermont Avenue and Shatto Place.
The site, directly across from a Red Line subway station, has some of the highest zoning allowed by the city. Gerding/Edlen plans to raze the buildings to make way for a high-density, transit-orientated residential building with ground-floor shops.
“We’re still very early in the planning process, so not much has crystallized yet,” said Tom Cody, a Gerding/Edlen principal. “We’re looking to do something very exciting.”
Gerding/Edlen has a reputation for building residential towers in urban areas. The firm has a joint venture with Portland, Ore., developer Williams & Dame Development Inc., which is building several high-rise condominium buildings in downtown L.A.’s South Park neighborhood.
Unlike its downtown projects, Gerding/Edlen is developing the Koreatown site by itself. Cody said the firm expects to close escrow early next year and start construction in six to 12 months.
Cody declined to specify the price or the sellers of the property, but a title search revealed that both parcels were owned by the Bolour Trust, which also owns large tracts of land in Hollywood.
Land in Koreatown is selling for between $250 and $300 a foot. Using those figures, Gerding/Edlen is paying between $23 million and $27.6 million for the site.
Though Cody has his hands full with the South Group and the new Koreatown site, he said Gerding/Edlen is looking to have more projects underway in Los Angeles. “We believe in expanding our efforts in Los Angeles,” he said, “and filling a void that we see in the market.”
*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
[email protected]
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