Not since 1994 has the 22-story office building at 1000 Wilshire Blvd. been fully occupied. But with two recent lease transactions that will change a sign that the downtown Los Angeles office market continues to gain strength.
C.V. Starr & Co. Inc., a global insurance firm, has signed a 10-year, $6.2 million lease for 19,204 square feet of space at the 20-year-old building. The company will occupy the top floor in May when it moves in. The deal breaks down to about $2.69 per square foot per month.
In the other transaction, environmental engineering firm CH2M Hill Cos. Ltd. has leased 19,204 square feet in a five-year deal that breaks down to about $2.52 per square foot per month.
The deals are emblematic of a real estate market that recorded a fourth quarter office vacancy rate of 14.1 percent, down from 14.9 percent a year earlier. Average per-foot monthly asking rent for Class A space was up to $2.86 from $2.70 a year earlier, according to Grubb & Ellis Co.
“I think the key is that with really good buildings that are well located, there is demand for them,” said John McAniff, managing director at Jones Lang LaSalle Inc., who represented building owner Beacon Capital Partners LLC in the deals.
The leases were completed as 1000 Wilshire Blvd. has been put up for sale by Beacon, a Boston-based private REIT.
The 471,692-square-foot building is part of Beacon’s 15-property Beacon Capital Strategic Partners III LP portfolio, which is on the market and includes Class A office properties in New York, Boston, Washington, D.C., San Francisco and Seattle, according to Beacon Capital spokesman Alex McCallum.
The portfolio, which features downtown’s 615,000-square-foot Figueroa Plaza, could go for as much as $5 billion, and is being brokered by Eastdil Secured LLC, Goldman Sachs Group Inc., and Morgan Stanley & Co. Inc.
Tim Miller of Jones Lang LaSalle also represented Beacon in both lease deals while C.V. Starr was represented by Clay Hammerstein of CB Richard Ellis Group Inc., and CH2M Hill was represented by Brian Davies and Dan Gallup of CRESA Partners LLC.
Playa Vista Development
With commercial real estate company Tishman Speyer Properties LP and investment group Walton Street Capital LLC making a push for office development in Playa Vista, real estate industry experts say the area is set to become a significant office submarket in Los Angeles.
The two firms are paying over $200 million for Playa Capital Co. LLC’s, 64-acre property near the intersection of Jefferson Boulevard and Centinela Avenue. Nearly 2 million square feet of office space could be built at the site.
Because of an increasingly tight West Los Angeles office market, which posted a 6.4 percent vacancy rate for the fourth quarter of 2006 down from 8.8 percent a year earlier there is potential for a vibrant Playa Vista office market.
“I think we are going to see the submarket of Playa Vista become an actual office submarket similar to Century City, Santa Monica or Beverly Hills,” said Blake Mirkin, senior vice president in CB Richard Ellis’s Century City office. “By virtue of demographics and the traffic congestion coming through the South Bay, (Playa Vista) is a very nice location to stop people from driving downtown.”
Playa Vista is already established as a residential community, and other office developments are in the pipeline, including a five-building complex by Lincoln Property Co.
A spokesman for Playa Capital declined to comment because the deal is still in escrow.
Industrial Sale
A large South Bay industrial portfolio has changed hands, with the four properties in the deal 99 percent leased, highlighting the tightness of the area’s industrial market.
Invesco Real Estate, a United States-based investment division of United Kingdom firm Amvescap PLC, has purchased the 843,156-square-foot portfolio from Prudential Insurance Co. of America in a deal real estate sources value in excess of $90 million.
The properties in the portfolio include Carson’s El Presidio, totaling 104,000 square feet; Compton’s 301 W. Walnut St., totaling 215,316 square feet; Torrance’s Pacific Gateway Center, totaling 137,077 square feet; and Compton’s L.A. Business Center, which includes eight buildings for a total of 386,763 square feet. In total, the four properties include 13 buildings.
“Over the last year (Prudential) was one of the big buyers of industrial,” said Barbara Emmons, an executive vice president with CB Richard Ellis, who brokered both sides of the deal. “These were some assets they have owned for a long time and some they had recently closed on and repackaged.”
CB Richard Ellis’ Darla Longo, Kevin Shannon, Scott Schumacher and Mike Moore also brokered both sides of the transaction.
Marina Deal
Beverly Hills-based real estate services and investment firm Kennedy-Wilson Inc. and Wachovia Securities LLC have sold a Marina del Rey mixed-use office and retail development to MSQ LLC.
MSQ, a partnership between two unnamed Los Angeles-based private investment groups, paid $45.5 million for the property at 4700 and 4720 Lincoln Blvd.
The three-acre property, called Marina Square, includes a 66,476-square-foot office and retail building and another 6,168-square-foot building. Kennedy-Wilson and Wachovia Securities, a non-banking affiliate of Wachovia Corp., purchased the property in 2005.
According to Kennedy-Wilson president Mary Ricks, the deal breaks down to $623 per square foot.
“The buyer purchased a high-quality asset in an unbeatable location,” said Ricks, adding that there were multiple offers. Tenants include Panera Bread Co., Peet’s Coffee & Tea Inc., and U.S. Bank.
Both sides of the deal handled the transaction in house. It closed in mid-December.
Staff reporter Daniel Miller can be reached at (323) 549-5225, ext. 263, or
[email protected]
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