New Buildings at Playa Office Project Put Weight on Westside Market Glut
By DANNY KING
With completion of Phase I of Playa Vista's Water's Edge office project just six months away, developer MaguirePartners is adding a pair of buildings totaling 253,000 square feet to a market already creaking under the weight of its vacant spaces.
The first of the commercial buildings at Playa Vista offer sweeping views of Santa Monica Bay, a couple acres of open space, and floor plates approaching 50,000 square feet. "When we open the doors, we expect to have a substantial tenant," said MaguirePartners Partner Tony Morales.
A recent spate of discussions with potential tenants has given Morales confidence that most of Phase One will be leased by the end of the year.
While he wouldn't comment on the status of talks, sources said that two firms Cupertino-based computer security company Symantec Corp. and Santa Monica advertising agency Rubin Postaer and Associates each have an eye on the project. "They've toured the projects and they've shown interest," Morales said.
Larry Postaer, executive vice president and principal at Rubin Postaer, would only confirm that his agency was in need of 150,000 square feet and that Water's Edge was on the list. "It's among the many options were looking at," he said. "We're just fishing. It has its advantages, but it's not the only place."
Still, Gerald Porter, vice chairman at CRESA Partners who represents Rubin Postaer, said, "We had a rent number thrown at us. They made what I consider to be a little high for the market, but it was a responsible offer."
Symantec's interest in Water's Edge appears limited to buying Phase Two's 192,000 square foot building.
"The only thing that would work would be an equity interest in Phase Two, but we have not seen any interest from Equity Office (Properties) on that," said Porter, who also represents Symantec. EOP is MaguirePartner's money partner in Playa Vista.
Marketing into downturn
The two buildings of Phase I - at the northeast corner of Lincoln and Jefferson Boulevards - are on the fringes of West Los Angeles and South Bay, two markets marked by technology sector failures and a resulting rise in vacancy rates.
Its minimum rent requirements - Morales said the rent range will start at $3 a foot - are slightly above Marina/Culver City rates and about 25 cents above El Segundo rates.
Water's Edge faces the challenge of being located in a subregion with an identity crisis. Whereas a Century City site is a natural for a law firm while Miracle Mile has grown into a media center, the Marina-area is a fragmented office market. By signing on at Water's Edge, a tenant would be a pioneer of sorts.
Conceived before the dot-com meltdown, Water's Edge was designed to appeal to technology and new media firms that had been flocking to the Santa Monica and Marina areas. The project, which broke ground last May, has a signature design (the two-story Pavilion Building is a steel-and-glass structure with floor-to-ceiling views of the Santa Monica Bay) and a two-acre park in the middle of the campus.
"It's an excellent site in terms of ingress and egress, and you have the views," said Bruce Schuman, a senior vice president at Julien J. Studley.
But West L.A.'s office vacancy rate was 12 percent at the end of the third quarter, twice that of a year earlier, while South Bay's rate jumped to 16 percent from 12 percent during the same period, according to Grubb & Ellis Co.
"(Maguire) always seems to pull the rabbit out of the hat, but his timing couldn't be much worse," said Vincent Pellerito, senior director at Cushman & Wakefield.
Still, Pellerito conceded Water's Edge had some advantage for a developer known to find creative ways to lure tenants. "(Rob Maguire) usually comes up with tenants that other people are incapable of securing," said Pellerito. "He's much craftier than most."
"They'll have to be very aggressive and find the right name to kick off the project," said Blake Mirkin, first vice president at CB Richard Ellis.
It is the quality of the project that has allowed MaguirePartners to expand the marketing efforts far beyond the tech sector that may have been difficult to lure. "Most technology companies won't want to go to something of this quality," said Schuman. "They go for cheaper stuff."
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