Timing is everything. Mar Canyon Gersten LLC chased a Torrance property so long the market had turned by the time the deal closed. But then again, timing is everything. So by the time the firm is done its renovation, it's banking on the market having rebounded. Still, the timing could still have been better. Hundreds of thousands of feet of office space in the South Bay submarket sit empty, and Mar Canyon Gersten will be adding another 165,000 square feet to the mix. It will be spending $16 million to convert a 235,000-square-foot industrial building to Class-A office space. This in a submarket with a vacancy rate of 16.2 percent at the end of the third quarter, according to Grubb & Ellis Co. Torrance alone reported 15.7 percent vacancy.
What's more, the South Bay tallied the highest negative absorption in the county 649,809 square feet fully a quarter of which was lost in Torrance.
Mar Canyon Gersten bought the property for $9.5 million from Honeywell International Inc. earlier this year, and William Messori, vice president of Mar Canyon Gersten's parent organization, Mar Ventures Inc., called the deal a bargain despite the down market. He said replacement cost on the building the developer is creating would be around $40 million, well in excess of the combined purchase price and conversion cost.
The building at 2545 W. 190th St. sits on 10 acres, property entitled for redevelopment into an office campus. Honeywell has signed a lease for 60,000 square feet in the building, leaving 165,000 square feet available when the renovation is completed, ostensibly next spring.
While it would seem the timing could have been better, Dave Toomey, principal at CRESA Partners LLC, said Mar Canyon Gersten had been in negotiation for the property for at least 18 months. Back then, the South Bay was one of the hottest markets in L.A. County, with a third quarter 2000 vacancy rate of 11.8 percent.
Regardless of timing, Toomey, who had no role in the acquisition, said the project should go forward and isn't as bad off as it might seem. The conversion of industrial property to office product, particularly in a tertiary office market such as Torrance, can be done if the developer is creative with rent pricing and spends enough to deliver top-quality space.
"They paid an attractive price for the building so they can afford to spend some money and still be in at an attractive price," he said. "Would someone start that project today? Probably not."Justice Team Recommended
An L.A. County search committee has selected a development team for a $300 million renovation of the Hall of Justice on Temple Street.
Jean Huston, justice deputy to county Supervisor Michael Antonovich, said the team consists of developer Urban Partners LLC, Nadel Architects, Clark Construction, financial services company Salomon Smith Barney and real estate services group Jones Lang LaSalle.
The search committee was made up of representatives from the Sheriff's Department, the county Department of Public Works, the city of L.A. Department of General Services and private sector financial services consultants. The recommendation still must go before the Board of Supervisors, which Huston said should happen this month.
"We're very satisfied that we are going to renovate this historically important building," Huston said. "Over the long term, it will decrease the need for leased space."
The Hall of Justice was deemed unsafe to occupy after the Northridge earthquake in 1994, at least until substantial renovations were made. The county has $6 million from the Federal Emergency Management Agency to apply to the renovation project.
Huston said the district attorney, public defender, alternate public defender and sheriff would be housed in the rejuvenated building.Shopping Center Sold
Marcus & Millichap sold the 18,050-square-foot Venridge Plaza Shopping Center, 22864-98 Ventura Blvd. in Woodland Hills, to a family trust for $3.1 million ($171 per square-foot). Matthew C. Sullivan, senior investment associate, and David W. Ridgway, senior associate, both of Marcus & Millichap, represented the Seller, Ventura Equity LLC. Lane Schwartz, senior investment associate at Marcus & Millichap, represented the buyer.Leases and subleases
Rich Products Inc. of Buffalo, N.Y., signed a 10-year, 39,700-square-foot industrial lease for $2.4 million at 12805 Busch Place in Santa Fe Springs. Sprenger and Lance Parker of Grubb & Ellis Co. represented the landlord, Wilson & Geo Myer Co. of San Francisco. Phil Norton and Steve Calhoun of Colliers Seeley International Inc. represented the tenant
Civil lawyers Baker Keener & Nahra signed an 8 1/2 year, $4 million sublease for 22,282 square feet at Library Tower, downtown. The attorneys will move at the end of January from their offices at 2850 Ocean Park Blvd. in Santa Monica Business Park. The new digs are on the 54th and 55th floors. Dave Toomey and Brian Davies, principals at CRESA Partners LLC, represented the tenant. Norm Mitchell and David Cushman of Cushman & Wakefield represented the sublessor, Sempra Energy
Cook-Inlet Energy Supply signed a 10-year, $11 million sublease for 24,000 square feet at 10100 Santa Monica Blvd. The energy company will relocate its headquarters in February from elsewhere in the building. It had been operating in a 5,370-square foot office on the 25th floor, and the new space is on the 18th. Cook-Inlet intends to sub-sublease 6,000 square feet to Loeb & Loeb LLP. Jeff Cowan, corporate managing director at Julien J. Studley Inc., represented Cook-Inlet
Century City lawyers Katten Muchin Zavis signed a nine-year, $20 million sublease for 52,000 square feet at 2029 Century Park East. The firm will move from 1999 Avenue of the Stars (the Sun America building) in February. According to brokers familiar with the deal, Akin Gump Strauss Hauer & Feld, which is subletting the space, is doing so at a $3.8 million premium over the underlying lease. Akin Gump no longer needed the space after buying Troop Steuber Pasich Reddick & Tobey and dumping an insurance litigation practice. Mike Catalano, corporate managing director at Studley represented Akin Gump in the deal. Bob Zelken of Jones Lang LaSalle represented Katten Muchin Zavis.
Staff reporter Christopher Keough can be reached at (323) 549-5225 ext. 235 or by e-mail at email@example.com.
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