Post Office Delivering L.A. Properties to Market

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It has been a tough year for the United States Postal Service, with projected losses of $7 billion for the fiscal year that ends this month. Mail volume is down: In 2006, the U.S. Postal Service handled 213 billion pieces of mail, but estimates that in this fiscal year it will handle just 175 billion pieces. The decrease can be attributed to the recession and the rise of the Internet.

As a result, the Postal Service is evaluating its real estate holdings and selling off properties when appropriate, according to Don Smeraldi, manager of corporate communications for the Postal Service.

Grubb & Ellis Co. has been hired to handle sales of some local properties. One site, a post office in downtown Culver City, is currently in escrow. Another property, at 313 Grand Blvd. in Venice, was recently listed without an asking price.

“The economy of course has had an impact,” Smeraldi said. “It is creating more of a sense of urgency to find ways to be more efficient and reduce facility needs.”

The 78,000-square-foot Venice property is a postal annex used for the distribution and sorting of mail. Just blocks from the beach, the site has prime development potential, said broker Martin McDermott of Grubb & Ellis.

“This is something in a part of town where land sells in 4,000-square-foot parcels,” he said. “This property represents an irreplaceable chance for somebody to assemble a great deal of commercial land between Abbot Kinney and the beach.”

Proposals for the site are due by Sept. 30. McDermott said that he is working with the Postal Service to determine whether two other Southern California properties should be sold.

Westchester Deal

Sony Corp. has signed a 50,435-square-foot deal at 6080 Center Drive in the Howard Hughes Center with landlord Equity Office Properties, a unit of New York-based private equity company Blackstone Group LP. The five-year lease is worth just shy of $9 million, according to a source with knowledge of the market.

The electronics company is already a tenant at the Westchester property, and currently occupies the top three floors of the 12-story building for a total of about 75,000 square feet. The new lease for the top two floors commences in April 2010 and includes an option to retain the 10th floor, a company spokesman said.

Carl Muhlstein, executive vice president at Cushman & Wakefield Inc., represented the tenant. He said Sony considered moving to another building before deciding to stay at the property, which is part of the 70-acre mixed-use campus off of the San Diego (405) Freeway that includes Promenade at Howard Hughes Center, an open-air, mixed-use property.

“There is significant volatility in nearby properties, and we did look elsewhere,” said Muhlstein. He said a combination of price and Equity’s flexibility and ability to cater to Sony’s needs kept the company at the property.

Sony uses the space for a division that designs software for its PlayStation 3 video game system and other products.

Frank Campbell, market managing director for Equity, said it is an encouraging sign for the real estate market that a high-quality tenant such as Sony would sign a deal in this environment. “They felt good about the economics but I think they also had a strong inclination to stay there,” he said.

Chris Houge, Hunt Barnett, Rick Buckley, Beau Rawi and Karly Nolen of Madison Partners represented the landlord. Conan Cotrell also represented Equity in-house. Steve Walbridge of Cushman & Wakefield also represented the tenant.

Century City Renewal

After spending a year looking elsewhere, law firm Gipson Hoffman & Pancione PC has renewed its lease at 1901 Avenue of the Stars. The 86-month renewal for 25,362 square feet is valued at about $5.5 million.

Gipson, a longtime tenant at the property, had considered moving to Santa Monica, Beverly Hills and Westwood before deciding to remain in Century City, said Madison Partners broker Hunt Barnett, who represented the firm in the deal with landlord Douglas Emmett.

The lease starts at about $2.55 per square foot per month on a full service gross basis with increases.

“I think they got a fantastic deal, said Barnett.

The renewal commenced in June. Both Gipson and Douglas Emmett, which was represented in-house by Rob Zaas, did not return calls seeking comment.

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

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