The first speculative office building built in L.A. County coming out of the recession of the early '90s has been sold for what is believed to be a record per-square-foot price in Glendale, a strong submarket that has continued to see its vacancy rate drop in the third quarter.

Sources familiar with the deal say J.P. Morgan Investment Management Inc., owner of Water Garden I, among other high-profile properties, is buying the high-rise at 655 N. Central Ave. for an estimated $260 a foot, or more than $130 million.

The next highest price was $250 a square foot, paid for the building at 505 N. Brand Blvd. in 1989, sources said.

Parties involved in the transaction would not confirm the details, except to say that escrow is set to close this month on the 533,000-square-foot building, which was built in 1999.

When asked about the sales price, Tom Bohlinger, senior vice president at CB Richard Ellis, who represented both parties in the transaction, would only say: "It would be one of the larger ones."

The building is being sold by Morgan Stanley Real Estate Fund II and PacTenPartners, which completed the building last year. Also referred to as Glendale Plaza, the building was one of the first speculative buildings to be developed in the L.A. area during the current economic cycle.

"Everybody thought (developing the building) was a pretty savvy decision," said Todd Doney, executive managing director at Insignia/ESG. "There wasn't anybody at the time competing for new tenants."

Bohlinger said the building's strengths are the fact it is new and has strong tenants with long-term leases.

The fully leased building primarily has tenants in the insurance business, including State Compensation Insurance Fund and UnumProvident Corp. The Hispanic Broadcasting Co. is also in the building.

However, before construction, it was being marketed to entertainment industry tenants, which at that time were gobbling up large blocks of office space in the market, not the least of which was the Walt Disney Co.

By the time leasing began, interest from entertainment companies for additional space had dried up and it took longer than expected to lease up the building.

As a result, Doney said, he wouldn't call the record price a home run.

"At the end of the day, I think the owners of this building will make some money," Doney said. "It was an expensive building. It's got some very nice materials. They did a very nice job in designing the product. But at one point when the building was completed and there wasn't a number of executed leases, there were some people in the market saying the building would not make the ownership any money."

The timing of the sale may have been just right. Today, some industry observers say interest in new construction in Glendale will soften now that Disney is expected to begin vacating space as its expansion plans at the Grand Central Business Centre move forward.

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