The U.S. Army is looking for a few good developers.
The Army is auctioning off a prime 10-acre parcel of land at the southeast corner of Wilshire Boulevard and Federal Avenue, an area that could see a momentous amount of development activity.
The site, located in the middle of some of L.A.’s highest valued property, could fetch at least $90 million, according to industry sources familiar with the parcel.
Surrounding the Army site, the federal government is proposing some controversial projects.
The FBI wants a new 1 million-square-foot building across the San Diego (405) Freeway at the Federal Building and the U.S. Department of Veterans Affairs is preparing to develop a chunk of its campus across Wilshire Boulevard.
Homeowner and business groups have protested the developments because they believe the projects would bring the area’s already congested roadways to a standstill. The groups would prefer the land be kept as open space.
“The local community has been pretty vocal about what they like and don’t like in the projects across the street at the VA campus and at the Federal building,” said Tony Morales, a Staubach principal working on the auction. “We’re well aware of the challenges.”
All the parcels are in unincorporated portions of L.A. County, which would control what private developers could build on them. Currently they are zoned for uses such as educational facilities, a research campus or government uses.
However, the successful bidder of the Army land will probably seek out additional uses, Morales said. “A buyer or developer of that property will probably have to go through a rezoning process,” he said.
Instead of a straight cash payment, developers interested in the property would have to enter into an exchange. The Army has properties in other areas of the state where the successful bidder would have to build the military new facilities.
The winning bidder will have to provide facilities both new construction and additions to existing buildings on government property in California at three bases, possibly including March Air Reserve Base in Riverside, according to the Army’s Web site on the bidding process.
If the value of the land at Wilshire Boulevard and Federal Avenue exceeds the cost of building the Army’s new facilities, then the developer would have to make a cash payment to make up the difference.
Morales said even though the land is being sold through an auction process, the Army is looking for a developer who will work with the community on whatever is built at the site.
“Our goal is to really explore the various uses and promote a responsible development in the area,” he said. “We want a buyer who will do a responsible development, and not just try to maximize density and squeeze the most value out of the property.”
No Games
After nearly a yearlong search for a new location, video game giant Activision Inc. has decided to stay put in Santa Monica.
Activision renewed its 125,000-square-foot lease in the Santa Monica Business Park at 3100 Ocean Park Blvd.
Terms of the deal weren’t disclosed, but the 44-month lease is valued at about $17.1 million for the building’s owner, Equity Office Properties Trust.
“We explored the entire Southern California market and ultimately determined that Activision’s current location was still the right place for the company,” said Peter Best, a managing partner at Jones Lang LaSalle, in a statement. “This location provides Activision’s employees convenience, ample amenities and the overall creative environment they were seeking.”
Activision’s decision to stay in Santa Monica comes at a tough time for the video game maker and distributor. The entire video game sector has been in the doldrums for the past year, and Activision’s stock is still slowly rebounding from 52-week lows.
The deal is a win for Equity Office, which owns roughly 40 percent of Santa Monica’s 7.8 million-square-foot office market. In addition to the Santa Monica Business Park, Equity Office owns premiere office buildings ranging from Santa Monica’s ocean-side downtown to Yahoo Center on the city’s eastern border.
The heavy investment in Santa Monica is paying off too. Asking rents in Santa Monica spiked recently to nearly $4 a foot and average vacancy rates have dropped to 6.3 percent, according to Grubb & Ellis Co.
Moving In
Film distributor Genius Products Inc. is relocating to a stand-alone Santa Monica building in a deal valued around $3.6 million.
Genius Products is moving from San Diego into a 17,500-square-foot building at 2230 Broadway. The five-year lease with landlord PTL Realty works out to about $3.40 a foot.
The building is in the middle of Santa Monica’s quickly growing media district that now features blue chips such as Yahoo Inc., MTV Networks and Universal Music Group.
Due to the demand in Santa Monica, the building’s space was on the market for three weeks, according to Madison Partners’ Andrew Jennison, who represented the landlord.
“For a free-standing building, there’s nothing else of its kind,” Jennison said. “Securing a tenant in this market was really pretty easy.”
For five years Atari Inc. occupied the building, but the company broke its lease slightly early as the company decided to consolidate its operations into its New York headquarters. Before Atari, the building was occupied by Digital Entertainment Network Inc., a dot-com start-up that tried to sell on-demand streaming video over the Internet.
“The lack of creative office space in a single tenant building makes this property really appealing in this market,” Jennison said.
Matthew Brainard of Bailes and Associates represented Genius Products and PTL Realty was represented by Jennison and colleague Travis Landrum.
Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
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