Perhaps it was only a matter of time.
CareAmerica Health Plans announced plans last summer to relocate in the new West Hills Corporate Village office park. Then, just a month later, San Francisco-based Blue Shield of California announced that it would acquire CareAmerica.
On its face, that acquisition seemed to spell the end of plans for a big health maintenance organization to be an anchor tenant in the West Hills project. But both Blue Shield and developers of the the West Hills office park said last summer that they expected the deal to go forward.
Not anymore. The merger between the two insurance companies closed in November, and now Blue Shield is assessing its budget and space needs.
The company notified developers last week that it is “exploring the possibility” of subleasing the space, said CareAmerica spokesman Ross Goldberg.
CareAmerica still operates under its own name as a wholly owned subsidiary of Blue Shield, but that is expected to change later this summer. Blue Shield still plans to have administrative operations in the San Fernando Valley, Goldberg said, and may yet relocate to the West Hills project if that proves to be the most financially feasible option.
If not, Blue Shield is responsible for the 10-year, 160,000-square-foot lease CareAmerica signed last year for $35 million, and must find a tenant to fill the space.
CareAmerica has occupied a 215,000-square-foot space in the west tower of the Trillium Building in Woodland Hills for the past three years. That lease expires in late summer.
San Francisco-based BlueShield has a 60,000-square-foot regional office at the 6701 Tower at the Howard Hughes Center in Culver City, but Goldberg said that there are no plans to combine that office with the Woodland Hills office.
A number of tenants are looking at the space CareAmerica would have occupied, including the Rocketdyne division of Boeing Co. Rocketdyne is looking to expand from its offices in Canoga Park.
The 30-acre West Hills office campus is currently under construction and scheduled to open in the fall. The project was formerly occupied by Hughes Missile Systems, and the Beverly Hills-based development company Regent Development, in partnership with the investment group Shamrock Holdings Inc., is renovating 420,000 square feet of existing space and 170,000 square feet of new buildings.
On the lease front
Farmers Insurance signed a 40,000-square-foot lease this month to occupy the 27th and 28th floors at the MCI Center office building on Flower Street.
The law firm of Early Maslach Price & Baukol, which handles claims litigation for Farmers, will occupy the space. The 65-attorney firm is consolidating its operations from its current offices in El Segundo, Van Nuys and Mid-Wilshire, according to George Katunich of Travers Realty Oncor International, who represented the tenant. John Eichler of Cushman & Wakefield represented the landlord.
Electronic Data Systems Corp., meanwhile, recently expanded its presence in El Segundo. The company signed a 20,000-square-foot expansion at the Plaza at Continental Park, just six months after it signed a 60,000-square-foot lease, according to Bob Inch, vice president of marketing for the 2.5 million-square-foot office park. Like all premium office buildings in El Segundo, space there is tight: the 17-building office campus is currently 98 percent leased.
EDS had been subletting space at Continental Park for about five years before it signed the 10-year direct lease last year. Steve Silk and Jay Borzi of Cushman & Wakefield, Inc. represented the tenant in the transaction.
Acquisitions
– A 216-unit apartment building in Rancho Palos Verdes just sold for almost $26 million. An East Coast pension firm bought the Porto Verde apartments, located next to the former Marineland park site on Beachview Drive. The new owner plans to spend $3 million to renovate the mid-’70s-era property, which is fully leased, according to Melinda Russell, senior vice president of Capital Commercial Real Estate. She represented both parties in the sale.
– The owner of the Glendale City Center office building and its adjacent development site is combing through the final bids. Fewer than 10 parties, ranging from national real estate investment trusts to local developers, have put in offers all in the $100 million range, sources say.
A pension fund owns both the existing 18-story building, located at 101 N. Brand Blvd., and the adjacent site at the southwest corner of Brand Boulevard and Wilson Avenue, which is approved for a 22-story tower with 385,000 square feet of space.
A buyer will be selected in early spring and the deal is expected to close in the summer, according to Ron Azad, a portfolio manager at Westmark Realty Advisors who represents the seller. Once that deal closes, Glendale could potentially see its fifth office building get underway in the tight office market. PacTen Partners and the Howard-Platz Group have already broken ground on their projects, while Reliance Development Co. and Maguire Partners have office buildings in the works.
Free book
Building Trade Services recently completed its sixth edition of the Tenant Improvement Price Guide, which provides a baseline for tenant improvement costs for both interior and exterior renovations in commercial buildings. Richard Heyman, owner of BTS, created the guide to help commercial brokers devise tenant improvement budgets. For a free edition of the book, mail a letter of request to: BTS; 2014 S. Sepulveda Blvd.; Los Angeles, CA 90025
Joyzelle Davis covers real estate for the Los Angeles Business Journal.
