The Westside is the hottest office market in terms of tenant demand and rent hikes, but it has been pretty poky so far this year when it comes to large building sales.
That could soon change, however, now that the 400,000-square-foot Westside Towers is on the selling block.
The seller of the twin 12-story buildings, located on Olympic Boulevard near Bundy Drive, is looking to fetch about $100 million for the property.
The building is about 93 percent leased, with American Express Co. and Silicon Graphics, Inc. as major tenants, according to Jeffrey Resnick, president of First Property Realty Corp. The L.A-based firm represents the seller, the private partnership Westside Assoc.
Last year, the World Savings Building, Saban Plaza and Fox Plaza were among the West L.A. properties that sold. The once-brisk activity slowed this year, though, and most of the major building sales so far this year have taken place in the San Fernando Valley or the recovering markets of downtown Los Angeles and Long Beach.
The last major Westside property sale took place in November, when Douglas Emmett Realty Advisors purchased the trophy Landmark II tower in Brentwood. That class-A building sold for about $320 per square foot.
The Westside Towers, built in 1985, isn't in the same league, but the owner hopes to capitalize on its location to pull down a $250-per-square-foot price.
The Westside posted a 14.7 percent vacancy rate last quarter, compared to 16.7 percent for the rest of the metro region, according to Grubb & Ellis Co. As the entertainment industry led the region toward economic recovery, pent-up demand with almost no new construction pushed rents up 20 percent last year.
Elsewhere on the Westside, another major property is changing hands albeit less publicly. Sources say that J.P Morgan & Co. is in escrow to purchase the ABC Entertainment Center, a 500,000-square-foot retail and office complex in the center of Century City.
The sale isn't really a surprise. J.P. Morgan already owns the adjoining Century Plaza Towers, a 2.2 million-square-foot office tower it acquired last March for $480 million. J.P. Morgan also has the ground lease on ABC Entertainment Center, but the buildings are owned by ERE Yarmouth, which is handling the investment for a partnership of Japanese firms.
Some market observers describe the ABC Entertainment Center as one of the plum renovation opportunities in L.A.: every lease in the project expires in 2001, with no options to renew giving the owner carte blanche to gut and reposition the center. The property also has air rights to build a high-rise office.
So if ABC is out of its present home by the year 2001, where will the television network's West Coast executive offices move?
Walt Disney Co., which acquired ABC in 1996, is beginning site work on a 10-story, 390,000-square-foot office building on its studio lot in Burbank. The building is scheduled for completion in mid-2000. Original plans for the building, designed by the late Italian architect Aldo Rossi, contained a logo for ABC. But that was "simply a placeholder," according to David Gensemer, director of corporate real estate and design for Disney.
Gensemer added that tenancy of the building has not yet been determined. But don't be surprised if it turns out to be ABC.
The new office, which faces the Ventura Freeway, is part of a larger master plan for development that has already been approved by the Burbank City Council.
Beverly Hills apartments
Four separate apartment buildings on Doheny Drive owned by three different owners recently sold. Now two owners control the Beverly Hills-adjacent properties, and one broker negotiated the deals.
"It was just coincidence that the buildings were geographically bunched together, but it made my (drive-time) easier," said Laurie Lustig, first vice president at CB Commercial Real Estate Group, who handled the $18.5 million total in sales.
A private investor purchased the 36-unit Beverly Hills Towers and the 16-unit Beverly Hills Regency Apartments. The buildings were listed at $4.9 million and $2.3 million, respectively.
Further down the street, the Villa Doheny I and II sister apartments, which are both 32 units, sold to a Northern California developer. The buildings went for a combined total of $12 million.
All of the buildings, which are located near the Four Seasons Hotel, were built within the past decade and are fully occupied, Lustig said. Both of the buyers purchased the buildings on the belief that "this is the year that landlords will really see a rent spike on the Westside," she said.
Maguire boosts Playa stake
Over at the 1,087-acre Playa Vista development, Maguire Partners announced that it doubled its equity stake in the 3.6 million-square-foot commercial portion. This is the first in a series of options that, if fully exercised, would give Maguire Partners 20 percent ownership of the project. Maguire is master developer of the commercial portion, and will also handle the marketing, leasing and property management.
The development company has no stake in the residential portion, and under the ownership agreement it will not be part of the proposed DreamWorks SKG studio. DreamWorks is still in negotiations with the ownership group, Playa Capital Co. LLC, on the possibility of building its headquarters there.
The investment banks Morgan Stanley & Co., Goldman, Sachs & Co. and L.A.-based Oak Tree Capital Management head the ownership of the entire commercial and residential project. Beverly Hills-based Pacific Capital Group and Union Labor Life Insurance Co. also have an option to buy in as equity partners.
In the residential portion of Playa Vista, which is scheduled to break ground first, the ownership group recently selected 10 architectural firms to design the 13 product lines available in the first phase. Playa Capital is acting as the master planner of the community and will select a merchant builder this summer, according to Ken Agid, vice president of marketing.
The 3,200-unit first phase will consist of two rental properties and 11 for-sale units, ranging from less than $200,000 to more than $1 million. Agid said the first phase is still on track for its planned spring 2000 grand opening.
The City of Hope leased the entire four-story building at 716 S. Olive St. in downtown L.A. The medical research and treatment center signed a 15-year lease for the 55,000-square-foot building, which was previously occupied by the architecture firm Timothy Walker & Associates. The City of Hope plans to relocate its donor-relations headquarters from its current location at 208 W. Eight St., where it has been for 40 years.
Ed Rosenthal and William Atha of Grubb & Ellis represented both the landlord and the tenant in the transaction.
The owner of the Northridge Fashion Center announced last week that it agreed to sell its nationwide portfolio of eight malls. Chicago-based General Growth Properties Inc. paid $871 million in cash for the London-based MEPC PLC's properties. The change in ownership will not affect the renovation underway at the Northridge mall.
Staff reporter Joyzelle Davis is leaving the Business Journal, and this will be her final column. Filling in on an interim basis with real estate news and features will be staff reporter Elizabeth Hayes.
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