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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."

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