Despite losing tenants to Hollywood and downtown Los Angeles, the Westside market remains strong at least by the measure of a recent building sale.
South Bundy Office Co. LLC, an investment vehicle controlled by an undisclosed pension fund, paid $66 million for Cornerstone Plaza, an eight-story, 165,000-square-foot office building at 1990 S. Bundy Drive. The deal breaks down to $400 per square foot.
“$400 is a big number and we had over 15 offers within 10 percent of that,” said Peter Best of Jones Lang LaSalle Inc., who represented seller Realty Center Management Inc.
Erick Paulson, of LaSalle Investment Management, who represented the buyer, said the pension fund had been looking in the West Los Angeles market because there is “a lot of potential for rent growth” there.
“Vacancy in the market is less than 10 percent and with high construction costs we think the market will cycle through some rent growth,” Paulson said.
Best said that the building could see rent spikes in the 20 percent range. The new owner will do some minor renovations to the building’s lobby, said Chris Houge of Madison Partners, who also represented the seller.
Though the price was high, Houge said that the Westside will soon see sales with even higher price per-square-foot figures because of a lack of new or available product. “There is nothing significant under construction or planned on the Westside unless you go to the Playa Vista area,” he said.
Houge projects that in the near future buildings on the Westside could trade for around $550 per square foot.
Tenants at the building include Nadel Architects and television station KSCI.
Realty Center Management also was represented by Jay Borzi, Kevin Crummy and Stephen Somer of Eastdil Secured LLC, and Rick Buckley of Madison Partners.
Barker Buys
Early next year Barker Pacific Group Inc. and The Praedium Group LLC will begin renovating an office building the two companies have bought in Los Angeles.
Barker Pacific and real estate investor Praedium paid $10.9 million, or $281 per square foot, for the 38,594-square-foot office building at 8075 W. Third St.
The five-story building at the corner of West Third Street and Crescent Heights Boulevard is currently 60 percent occupied and the new owners plan to renovate it to cater to entertainment and media companies.
Common areas and the lobby will be renovated, said Michael Barker, managing director of Barker Pacific, a commercial real estate firm. A retail tenant also will be brought in to occupy ground-floor space.
“It’s a healthy price. (We) have a history of buying assets that in many cases have been tired, neglected and in need of rejuvenation and this property fits well in that category,” Barker said. “(The building) should be close to 100 percent leased because neighboring buildings are full.”
The seller was Office Building Crescent Heights Ltd., an entity of a German family trust. “The ownership is absentee in Europe. The building was not getting attention,” Barker said.
Barker Pacific and Praedium were represented by The Rising Real Estate Group.
The seller was represented by Joe Kimaz and Nico Vilgiate of CB Richard Ellis Group Inc.
Torrance Deal
The cachet of the Torrance industrial market has lured Housewares International Inc. away from Rancho Dominguez and Carson.
The company, which is an importer and marketer of houseware products, has signed a 10-year lease at a 259,327-square-foot industrial building in Torrance, adjacent to Toyota Motor Co.’s national headquarters.
The market-rate deal for the building at 19400 S. Western Ave. is valued at $20.5 million. The building is owned by Sunshine Associates LLP.
“It’s a better address and a newer building,” said Don Smith, principal at Lee & Associates Commercial Real Estate Services’ South Bay office, who represented Housewares International. “It’s got curb appeal.”
Beng Liu, chief executive of the U.S. arm of the Australia-based company, said that by consolidating efforts at one building, the company will be able to manage its expansion more efficiently. “The new building is larger so it can accommodate our double digit growth in sales,” Liu said.
The landlord was represented by Eric Knirk of Fremont Associates.
Burbank Lease
Entertainment law firm Terry Hines & Associates has extended its lease at 2550 N. Hollywood Way in Burbank.
The five-year lease deal for 21,960 square feet is valued at $3.5 million, breaking down to about $2.66 per square foot per month.
“It was a market rate deal for Burbank,” said Vilgiate, who represented the law firm. “We searched the San Fernando Valley, Hollywood and West L.A., but at the end of the day Burbank made the most sense due to it being home to the major studios.”
Clyde Reetz of CB Richard Ellis also represented the law firm. Landlord LaeRoc Partners Inc. represented itself in-house.
Staff reporter Daniel Miller can be reached at (323) 549-5225, ext. 263, or
[email protected]
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