Valley Sale Marks Highest Per-Foot Price in Three Years
Real Estate
by Danny King
In the biggest San Fernando Valley sale so far this year, First Financial Plaza in Encino has been sold for $47.3 million.
The 217,500-square-foot office building, at the southeast corner of Ventura and Balboa boulevards, was bought by San Mateo-based REIT Glenborough Realty Trust. The building is fully leased, according to Tom Bohlinger, a senior vice president at CB Richard Ellis who brokered the transaction.
“It’s generally recognized as the finest office building in the Encino market,” said Bohlinger, who, with CB Richard Ellis’ Sean Sullivan, Mark Perry and Madeline Schwartz, represented both buyer and seller, Cornerstone Suburban Office LP, on the deal. “(Leasing activity) has been very, very strong, even in this market.”
As a result, rents in First Financial Plaza are in the $2.35 to $2.40 a foot range, well above the $2.16 average asking rent for Class-A space in the central Valley.
At $217 a foot, the sale price is the highest figure since Encino Executive Plaza, three blocks to the west, sold for $225 a foot in 1999, according to Bohlinger, and dwarfs the $131 a foot the nearby Encino Atrium sold for earlier this year.
The price also reflected the diverse tenancy the largest tenant, Pepperdine University, leases just 32,000 square feet and there are about 50 tenants in the building, limiting Glenborough’s exposure to effects of a single tenant move-out.
The other big Valley deal in the works is the sale of the 2.9 million-square-foot Warner Center Properties’ 21-building portfolio in Woodland Hills. A deal was struck in January for its sale to Robert Voit and Douglas Emmett Realty Advisors for an estimated $400 million, according to the Los Angeles Daily News. That deal has yet to close.
Exit, Stage East
A group that includes hotelier Urs Jakob has put the Louis B. Mayer building in Hollywood, as well as two adjoining buildings, on the market for $8.25 million.
Located on the southwest corner of Hollywood Boulevard and Western Avenue, the Mayer building, which originally housed MGM’s central casting office when completed in 1927, was designated an Historic-Cultural Monument by the city in 1988. One of its flanking buildings at 1671 Western Avenue is a 15-unit apartment complex with ground floor retail space while the other, at 5512-20 Hollywood Blvd., houses an adult care facility. The three buildings total about 84,000 square feet of office, retail and residential space.
The Jakob-led ownership group, Hollywood St. Francis LLC, which bought the properties in March 2001, also bought the old St. Francis Hotel on the other side of Hollywood Boulevard and redeveloped it into the Gershwin/Banana Bungalow.
“The owners figured they were better off buying that property and stabilizing it,” said Stephen Lampe, senior investment associate at Marcus & Millichap. Lampe has the listing on the property. The group leased one of the two retail spaces at 1671 Western Ave. and the first floor of 5512-20 Hollywood Blvd. while completing the renovation of the Mayer building, according to Lampe. “They stabilized it enough and figured this was a good exit strategy.”
Held Held Again
Small tenants and few vacancies helped create a large deal in Beverly Hills.
A group of local private investors purchased the master lease of the 66,000-square-foot office building at 315 S. Beverly Dr. for $12.4 million from Bokay Co. The building, owned by Held Properties, is 95 percent occupied. Bokay acquired a 90-year master lease from Held in 1966.
“You can do deals at this building for $2.85 or $2.90,” said Nick Brighton, president of Newport Beach-based Velocity Investment Sales. “It’s a B+ building in an A- location.”
Brighton represented both the lease buyer, 315 South Beverly LP, and Bokay.
The $188 a foot paid for the leasehold interest, which extends through 2056, reflects a tight market for Beverly Hills buildings with rents running at a discount to the $3.50 a month asking rates in the nearby “Golden Triangle.”
The building, built in 1962 and renovated by Bokay five years ago, has about 20 tenants, most of which are attorneys or talent management companies.
Taking the Cure
One healthcare firm’s lease may not cure an ailing Brentwood submarket, but it can’t hurt.
Santa Barbara-based Tenet Healthcare Corp. signed a 10-year lease for 33,500 square feet in the 235,000-square foot West Wilshire Center at 11620 Wilshire Blvd. The lease renewal Tenet’s current lease is up in October 2002 was worth $11.3 million.
The deal is a boon for landlord Lowe Enterprises Inc., which has recently renovated much of the project and will be putting an additional 50,000 square feet at West Wilshire on the market in the fourth quarter. It will also help a Brentwood submarket whose vacancy rate was 10.5 percent in the first quarter, up from 6 percent in the year-earlier quarter, according to Grubb & Ellis data.
“They looked at different alternatives in the market and decided staying at West Wilshire was best for the business,” aid CB Richard Ellis Senior Vice President Jeff Pion, who, with Deron White, represented Lowe Enterprises on the deal.
Greg Johnson of Daum Commercial Real Estate represented the tenant.
Staff reporter Danny King can be reached at (323) 549-5225 ext. 230, or at
[email protected].
