The subprime mortgage meltdown continues to cause collateral damage, including a depression of large office markets such as Orange County, where many major lenders were located.

And on a smaller level, lenders throughout Los Angeles County have vacated offices, creating challenges for landlords. One recent sales deal in the San Fernando Valley was complicated by an exodus of subprime lenders from the property.

The office building at 11565 Laurel Canyon Blvd. in Mission Hills sold for $3.98 million in a deal that closed June 30 months after it was put on the market and only after broker Jay Martinez worked to lease space when the building lost tenants in the subprime business.

“You need to be able to stabilize the asset now, it’s not just selling it, like before,” said Martinez, of Lee & Associates Commercial Real Estate Services, who represented both sides of the deal.

The 20,478-square-foot building was 100 percent occupied when it was put on the market in October and 84 percent occupied at the time of sale by the Russon Family Trust to James Hopper, a Los Angeles real estate investor who did the deal under the Le Rual Venture LP name.

But at one point while the building was on the market, three tenants whose subprime lending businesses were decimated by the meltdown went out of business. They had occupied six suites at the two-story building.

“It was challenging we lost about a third of space last fall after the banks tightened up,” said Martinez, who was subsequently able to lease four of the vacated suites.

The building is occupied by a mix of local small businesses and the ground floor is leased to the San Fernando Valley Community Mental Health Clinic.

The deal breaks down to $194 per square foot. The family trust sold the property on a 1031 tax-deferred exchange basis.

Brokers Move


Longtime commercial brokers Peter Best and Lisa St. John have left real estate services company Jones Lang LaSalle Inc. and will join Los Angeles-based boutique brokerage Madison Partners this week.

Best and St. John, who often work together, resigned from Jones Lang LaSalle on July 14, said Gary Weiss, a principal at Madison Partners, which has offices in Brentwood and Century City.

“It’s a big pickup for us,” Weiss said. “They together probably have close to 45 or 50 years of experience. Each brings a tremendous amount of respect and professionalism. They have great reputations and do a lot of business.”

The pair will join Madison Partners as principals.

“The opportunity to work with such great people, and friends, and achieve an equity position, was an opportunity we just could not pass up,” Lisa St. John said in a statement. “We have had an incredible experience at Jones Lang LaSalle, and know that with the recent Staubach merger they will continue to be a dominant global firm.”

Weiss said that the brokers’ departure from Chicago-based Jones Lang LaSalle was unrelated to the company’s recent merger with Addison, Texas-based Staubach Co. “It was time for them to do something different,” he said.

A Jones Lang LaSalle spokesperson did not immediately return calls seeking comment.

Fitness Deal


Gunnar Peterson, personal trainer to the stars, has signed a five-year deal for space at 9975 Santa Monica Blvd. in Beverly Hills. Peterson will operate a training facility for his clients and maintain offices at the 5,200-square-foot, second-floor space. The sub-lease deal, which closed in June, is valued at $1.5 million. The rental rate was not disclosed.

Peterson did the deal with sub-lessor Sonya Dakar Skin Care under the Work In Progress LLC name. Dakar, who founded her namesake skin clinic in 1984, also owns the 12,000-square-foot, three-story office building via a different business entity.

“She had occupied the second floor while she built out the third floor,” said Kevin Lachoff of Grubb & Ellis Co., who represented Sonya Dakar Skin Care, under the Sonya D International Inc. name. The skin care company occupies the balance of the building. Peterson is currently renovating his space and it should be complete by the end of the year, Lachoff said.

“We were showing it as a built-out office with no tenant improvement budget,” Lachoff said. “(Peterson) decided he needed much more open space for his use and just a couple of offices. He demolished 85 percent of the square footage.”

Kathleen Silver and Lachoff’s father, David Lachoff, of Grubb & Ellis, also represented the sub-lessor and Jim Burnap of Beitler Commercial Real Estate Services represented the sub-lessee.

Staff reporter Daniel Miller can be reached at [email protected] or (323) 549-5225, ext. 263.