Two years after being approved by City Hall, Century City’s last high-rise is finally on the verge of breaking ground.
JMB Realty Corp. is in final negotiations on two major lease deals that, once consummated, will enable it to begin construction of its $250 million Constellation Place tower, according to sources close to the deals.
Metro-Goldwyn-Mayer Inc. is finalizing a deal under which it will occupy more than 400,000 square feet of the 700,000-square-foot tower, and get building-top signage for its famous lion logo. Simultaneously, aircraft leasing firm International Lease Finance Corp. is on the verge of signing a deal for 150,000 square feet.
ILFC is currently housed at the neighboring SunAmerica Center at 1999 Ave. of the Stars. Late last year, the company renewed its lease at SunAmerica Center for another five years, but that lease will essentially be up by the time Constellation Place is completed in 2003.
MGM has about three years left on its lease at MGM Plaza in Santa Monica and it declined to renew there before the recent sale of the property to Tishman Speyer Properties.
“They like the (Constellation Place) building and Century City, and they (don’t have a high profile) at MGM Plaza,” said one source.
MGM’s broker, Mitchell Leit of Corporate Real Estate Services, declined comment. Last fall, however, Leit said MGM was looking at a number of options, including Constellation Place, the nearby ABC Entertainment Center, Howard Hughes Center near El Segundo, Corporate Point in Culver City, Playa Vista, or even staying put.
Mark McCaslin of the McCaslin Co., who is marketing the planned 34-story Constellation Place on behalf of JMB, declined comment on any specific deals.
“We are moving ahead with marketing the property and anticipate groundbreaking at the end of the year,” he said. The initial tenants could move in some time in mid-2003, he said.
He said he hopes to have some pre-leasing announcements in about 30 days.
“We have no deals done, no letters of intent signed,” he said.
A key anchor tenant
Brokers familiar with the Century City market said the tower’s space will be hungrily devoured by tenants, given the submarket’s current low vacancy rate of 5 percent. But it’s also important for JMB to attract a prestigious anchor like MGM in order to secure the most favorable financing.
“Very few lenders will give money to build a building on spec,” said Gary Weiss of DLJ Realty Services. “With a pre-lease tenant like MGM, it lends instant credibility to the building, and then others want to be there.”
Weiss said a few law firms are also looking at leasing space in the new building.
“A bunch of people are out there,” he said.
JMB officials have always said they would not commence construction without tenants committed.
“They’re taking a conservative tack,” said Stan Gerlach with CB Richard Ellis Inc. “If I was JMB, I’d build on spec. I’d be going full steam ahead.”
Even if the economy were to soften and more dot-coms were to fold by the time the tower is erected, the additional space wouldn’t hurt the overall market, Gerlach said. He noted that the tower’s 700,000 square feet of space is a mere blip in the Westside’s overall inventory of 41 million square feet. And tenant demand remains intense.
“I’d love to see more construction in Century City, since the landlords claim they have no space and want to up the rents,” said Jeff Cowan with brokerage Julien J. Studley Inc. “The absorption is so great, we’re not talking about all of a sudden turning it into a tenants’ market again.”
Sources said the rent being discussed in the MGM deal is north of $4 per square foot per month, not out of line with other top-tier buildings on the Westside.
For MGM, locating in the tower could be more efficient. Gerlach said it would signal the studio’s desire for “a major market presence or visibility, and possibly some savings for them, instead of being spread out in a complex.”
Having MGM in the neighborhood would only add to the prestige of a Century City address. Fox Entertainment Group and several top law firms, investment banks and corporations already have offices in the district. Some of those might look to further enhance their image by relocating to the $250 million Constellation Place tower, real estate sources say.
And ILFC is no slouch, either. It owns a huge fleet of commercial aircraft, which it leases to airlines around the world. Low-profile ILFC, a wholly owned subsidiary of American International Group, is one of the biggest customers of both Boeing Co. and Airbus Industrie. ILFC’s three co-founders Leslie and Louis Gonda and Steven Udvaar-Hazy are all billionaires. Udvar-Hazy continues to head the company, and Leslie Gonda remains actively involved, although Louis Gonda has moved on to other business pursuits.
In addition, ILFC regularly plays host to some of the highest-ranking figures in the commercial airline industry, which will further put Constellation Place on the map of L.A. power hubs.
A view of the ocean
The building has been designed by Johnson Fain Partners, which also designed Century City’s Fox Plaza and SunAmerica Center. It will feature a curved fa & #231;ade and blade-like edges and, of course, spectacular views throughout. It will be the farthest west of the Century City high-rise towers.
“It will be highly visible from an identity point of view,” said architect Scott Johnson.
Johnson said Constellation Place will also feature a covered driveway similar to a high-end hotel, an exterior of glass, stainless steel and two types of imported granite, and an all-glass lobby with no window frames. The floor plates will also be unusually large, at 30,000 square feet each.
The tower and its parking structure will be connected by a garden with lush plantings and artwork. Its site is directly across Constellation Place from the Century Plaza Shopping Center.
