Musical chairs in a market with, by some estimates, a couple million square feet of sublease space available can be an interesting game.
Take the recent space-swapping deals made by Metropolitan Life Insurance Co. and Context Integration.
When MetLife decided to move the bulk of its West L.A. office to Irvine, it meant the company didn’t need all 72,000 square feet of office space at the Trident Center on Olympic Boulevard.
Context, a Massachusetts-based e-business services provider, was at the same time looking to get out of its 15,000 square feet at 11766 Wilshire Blvd., a building owned by Douglas Emmett Realty Advisors.
David Walsh, senior vice president with the Stone Co., which represented Context, said the company had misjudged its expansion needs and leased more space than it necessary when it signed a five-and-a-half-year lease six months ago.
Context found a likely taker for the space in MetLife, but the deal was complicated by MetLife’s corporate policy not to sublease space. So a deal had to be arranged through which Context paid a termination fee to get out of the remaining five years of the lease and MetLife leased the space directly from Douglas Emmett. Walsh said the termination fee was “literally pennies,” as the $2.8 million, five-year deal that MetLife agreed to is close to the deal terminated by Context.
Context now is in negotiation for much smaller office space elsewhere on the Westside, and Grubb & Ellis Co., which represented MetLife in the deal, now is looking for someone to sublease the space that the insurance company left in Trident Center. Marty Barkan of Grubb & Ellis said there already is significant interest in that 72,000 square feet, for which MetLife is on the hook for 12 years.
Hospital Group Expands
In more sublease news, San Francisco-based Catholic Healthcare West expanded its local operations by picking up 35,000 square feet of space at 330 N. Brand Blvd. in Glendale. The five-year lease, which will accommodate an extension of the organization’s existing Pasadena operation, was valued at $5.5 million.
The space was available because offices of General Motors Acceptance Corp. (which had been in 27,000 square feet) and CIGNA Corp. (which had 8,000 square feet) each consolidated at different locations.
The space was not on the market long because its size made it attractive, according to Shaun Stiles of Colliers Seeley International Inc., who represented the landlord, pension fund TIAA-CREF, in the deal.
“It’s the largest single floor available in Glendale,” Stiles said. “It’s hard to get all your folks on one floor.”
Redcoats Coming
According to San Fernando Valley real estate sources, London-based property investment firm Grosvenor has an agreement to buy the Warner Corporate Center at Canoga Avenue and Victory Boulevard in Woodland Hills.
Tokyo-based Nomura Real Estate Development Group will sell the 250,000-square-foot office building for $43 million ($170 per foot), according to sources. The deal marks the second time this year that Nomura has had the building, which is 75 percent occupied, in escrow to sell. The first potential buyer, Santa Barbara-based Pacifica Commercial Real Estate Group, bailed after offering more than $45 million, sources said.
Officials at Eastdil Realty, which is representing Nomura in the deal, declined to comment on the deal.
Cultural Center Relocates
The people at Lula Washington Dance Theatre in Inglewood are trying to get all their folks into one building.
Executive Director Erwin Washington said the organization recently put up a $100,000 nonrefundable down payment on a building at 3773-75 S. Crenshaw Blvd. and is scheduled to close the $1.5 million acquisition in July.
Washington said the group outbid six developers in U.S. Bankruptcy Court. The building, which lately has been serving as HQ for the Antonio Villaraigosa for Mayor campaign, once was the home of Smith & Sons Ambulance Service.
Washington said the dance organization has been looking for a home since its newly renovated building was damaged beyond salvation by the 1994 Northridge earthquake. Plans to rebuild at Adams and Sycamore streets were stymied by the city of Los Angeles and its plans to seize the property through eminent domain. That issue still is in litigation.
In the meantime, Washington collected $100,000 from an existing building fund, $850,000 from the Federal Emergency Management Agency and the balance from U.S. Bank.
That will be enough to buy the building, but Washington said the group needs another $250,000 to turn the office building into a “state-of-the-art cultural center aimed at youth.”
Package Sale
When a small business gets fed up with paying rent, the best way out is to buy a building and become your own landlord.
Santa Fe, N.M.-based Summit Investment Co. LLC took advantage of that situation when it sold three buildings to tenants of its Gardena office campus for a combined $3.7 million.
Marquis Design, a furniture designer/importer, bought the 26,079-square-foot building at 1495 W. 139th St.; Major Fulfillment, a manufacturing and distribution company, bought the 18,150-square-foot building at 1455 W. 139th St.; and 26th Street Properties bought the 12,100-square-foot building at 1475 W. 139th St.
Individual sale prices were not disclosed. Luke Staubitz and John Boehm of The Klabin Co. represented Summit Investment in all three transactions. Scott Peters and Dave Stromath of CB Richard Ellis Inc. represented Marquis Design. Ed Stiles of NAI Capital Commercial Real Estate Services represented Major Fulfillment. Brad Luster of Major Properties Realtors represented 26th Street Properties.
Staff reporter Christopher Keough can be reached at (323) 549-5225, ext. 235, or at [email protected].
