Construction is going full-bore on a small office building east of the civic center in Beverly Hills, even though it appears to be surplus property for owner Universal Studios.

Universal acquired the property at Third and Maple streets from David Geffen and had planned to build a site to house its music labels, including Interscope Records, sources said.

But since then, Universal acquired PolyGram, and the 75,000-square-foot building became too small. As a result, Universal Music Group is currently negotiating to consolidate its record labels in the Arboretum Gateway, now under construction in Santa Monica. It is also selling the former Geffen Records lot on Sunset Boulevard in West Hollywood.

Sources say Geffen had hired well-known architect Charles Gwathmey for the job. Universal began construction about a year ago at a cost of almost $400 a square foot. The work also has been complicated by ground-water problems.

"They had to pump a huge amount of water out," said City Manager Mark Scott. "They're doing a great job. The Building Department is happy. It will be a signature building."

Beverly Hills also placed several conditions on the building, including free parking for tenants and visitors, and limited street signage on Maple, according to city officials.

At this point, construction is proceeding while Universal decides what to do with the property including selling it to someone else.

Playa Vista 'love fest'

Years of acrimonious relations among the major players in the Playa Vista development came to an end last week as DreamWorks SKG closed escrow on 47 acres of land.

And one of the winners was developer Robert Maguire, who had earlier lost control of Playa Vista to a consortium of investment bankers but retained a small equity stake.

"It's a love fest," said Playa Capital president Peter Denniston. "It's important to us to seek peace with Rob and get him firmly re-engaged to develop the phase-one commercial space."

DreamWorks will build a headquarters and studio campus. Maguire's task is to develop, manage and lease about 2 million square feet of additional commercial space. He also was given the chance to increase his ownership position in both the commercial and residential portions of the 1,087-acre project.

"The deal has had some thorny phases," Maguire said. "The important point is that a very big, very complicated deal has come together. The objective now is to make it into an incredible project."

He plans to get started on the first speculative buildings in the next six to eight months. Rents will be a little less than the going rate in Santa Monica, which is about $40 per square foot gross per year, Maguire said.

Care provider signs lease

SCAN, a senior health care plan, has entered into a 15-year lease in a seven-story office building now under construction at Kilroy Airport Center near Long Beach Airport.

The lease for 107,000 square feet covers four floors in the building at 3800 Kilroy Airport Way. SCAN, the primary tenant, plans to occupy its new offices in July 2000. The new lease also gives the firm the option of expanding to more floors.

SCAN will be moving from office space across the street in the Airport Center. The center has 600,000 square feet of office space that is 98 percent occupied.

In addition, Kilroy Realty Corp. just finished construction of a 137,000-square-foot building that is 60 percent occupied.

"The vacancy rate is much lower in suburban Long Beach than downtown. We've always outperformed the market," said Steve Black, executive vice president and chief development officer for Kilroy. "It's a very high-quality project, with granite-clad buildings, fountains and plazas."

SCAN is a non-profit entity that offers long-term care and is regulated like a health maintenance organization. It began 21 years ago, operating out of a small hospital room.

Kilroy is a real estate investment trust and one of the most active builders in Southern California. It plans to start construction in June on a 210,000-square-foot office project in Calabasas next to Rick Caruso's Commons retail project.

Robert Alperin and Kimball Wasick with Matlow-Kennedy Commercial represented SCAN in the leasing deal.

Software firms fill center

The West Hills Corporate Village is filling up, and the theme of late has been software firms.

Following on the heels of Sterling Software's 135,000-square-foot lease, Software Dynamics Inc. has leased 30,000 square feet in a 10-year agreement.

SDI, which is relocating its corporate offices from Chatsworth, is a privately held company that specializes in developing banking software for uses such as branch automation and customer relations.

Beverly Hills-based Regent Properties and Burbank-based Shamrock Holdings are jointly developing the 30-acre West Hills campus. Boeing has also taken 170,000 square feet.

Hal Cook of the Cook Co. represented SDI in the deal. Representing the landlord were broker Mark Sullivan of Julien J. Studley and attorney Anton "Tony" Natsis, a partner at Allen, Matkins, Leck, Gamble & Mallory LLP.

Culver City production space

Playa Vista isn't the only place on the Westside adding production space these days. On a much smaller scale, a Culver City project is providing 10,000 square feet of production space.

Called Stage-2, the facility will be open May 1 in the Conjunctive Points area of the Hayden Tract of Culver City. It is owned by a partnership between Pittard Sullivan, an entertainment marketing and communications company, and Samitaur Constructs, a real estate development and holding company.

Adjacent to Pittard Sullivan's world headquarters, Stage-2 is seeking producers to use the facility for upcoming productions. It has a 6,000-square-foot stage, dressing rooms, production offices, a green room and other facilities.

Elizabeth Hayes can be reached at (323) 549-5225 ext. 229.

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