The Westside office market, already jam-packed with office space and sporting a 9.5 percent vacancy rate, is about to see a 10.4-acre development site come on the market.
BAE Systems Controls, an operating unit of the English BAE Systems Plc, has retained CRESA Partners LLC to find a buyer for the division’s property at Bundy Drive and Airport Avenue in Santa Monica. No price has been set for the property, but Westside sources said the property is worth about $35 million.
The site, which has been held by BAE since it acquired Lear Astronics Corp. nearly 50 years ago, includes four buildings with a combined 200,000 square feet of space. It has been put on the market for a variety of reasons, according to company spokesman Larry Stone.
The value of the property has appreciated significantly over the years, Stone said, and could provide a nice cash windfall for the company. Another reason for selling the property is that the four-building campus is no longer efficient for the company’s operations.
Cashing in on an increasingly valuable asset shouldn’t have an adverse impact on BAE’s 650 employees at the site. Stone said the company informed its workers last month that it is looking to find new digs to lease within 20 miles of the Santa Monica location. There is no danger of a shutdown or layoffs, he said.
“We have taken great effort to inform them early about what we’re doing and are trying to keep them apprised of the situation every step of the way,” Stone said.
Stone and Matthew Miller, a principal at CRESA, said there are no preconceived ideas about where that relocation spot would be. There will not be any problem finding buildings to lease, Miller pointed out, referring to rising office vacancy levels.
As for its Santa Monica campus, BAE said it has done a preliminary environmental review of the site and is confident it is free of any potential “deal-breakers,” according to Stone.
BAE makes the equipment that controls movement of flaps on airplane wings. The company’s North American headquarters is in Johnson City, N.Y. Stone said there’s no chance the company would close up its Los Angeles operation, which also includes facilities in Ontario.
“We are committed to the Los Angeles area,” he said. “By seeking to relocate within 20 miles of the existing facility, it is our intent to make the impact on our employees as small as possible.”
If Miller and CRESA Partner Jerry Porter find a buyer for the property, BAE would lease back the buildings until it can find a place to move. Stone said that could take as long as two years, to ensure an orderly transition.
BAE would use the proceeds from a sale of the property to retire debt, Stone said.
Fashion Victim
The Japanese parent of Barneys New York Inc. closed on the estimated $34 million sale of its five-story department store at 9570 Wilshire Blvd. in Beverly Hills.
The sale was part of a three-property deal that also included buildings in Chicago and New York.
The exact price that the buyer, New York-based Ashkenazy Acquisition Corp., is paying for the store at Wilshire Boulevard and Camden Drive with roughly 115,000 square feet of retail space and 309 subterranean parking spaces is tough to pin down because it was part of a three-building package worth $169 million, according to Marc Pollock, first vice president of PG Team Retail. PG is a unit of CB Richard Ellis Inc. that specializes in the sale and lease of retail properties. The price estimate is based on square footage and income figures for the local store.
Pollock and Neal Galub, a senior associate at CB, represented both sides in the transaction. Pollock said that CB brokers in New York and Chicago handled the property sales in those markets.
Ashkenazy owns 3 million square feet of retail and office space across the country, Pollock said.
The Barneys building in Beverly Hills was a ground-up new construction project that opened in 1994. While Barneys’ parent company, Isetan Co., owned the building, with its marble entrance and spiral staircase and the Barney Greengrass deli, it had a long-term ground lease with Los Angeles residents Arthur Gilbert and David Blum. Ashkenazy is assuming the ground lease, according to Pollock.
The other two properties in the deal are a 264,498-square-foot store in Manhattan and a 47,488-square-foot store in Chicago. No ground leases were involved in those transactions, Pollock said.
Plugging In
Proficiency Capital of West Los Angeles has sold two buildings totaling 269,000 square feet to the Krausz Cos. Inc. of San Francisco. The terms were not disclosed.
The buildings are an eight-story, 157,000-square-foot building at 2300 E. Imperial Highway and a five-story, 112,000-square-foot structure at 2101 E. El Segundo Blvd. Both are fully occupied.
The Imperial Highway building, which comes with entitlements for 100,000 square feet of expansion, is home to Boeing Satellite Systems and Hughes Electronics Corp.’s DirecTV division. Raytheon Corp. is the major tenant at 2101 E. El Segundo Blvd.
John Ayoob and Grafton Tanquary of CB Richard Ellis’ South Bay office and Thomas Bollinger and Sean Sullivan of CB’s Los Angeles office Investment Properties Group arranged the deal.
Staff reporter Christopher Keough can be reached (323) 549-5225 ext. 235 or at [email protected].
