Grubb & Ellis Drama May Bring Broker Opportunities
By Jonathan Diamond
Staff Reporter
That sign of relief you heard over Memorial Day Weekend was the collective exhale coming from the local offices of real estate services firm Grubb & Ellis Co.
Rumors that the Northbrook, Ill.-based company was about to be merged into L.A.’s CB Richard Ellis Inc. swirled for two weeks and had a number of Grubb & Ellis’ agents preparing to jump ship.
“There is a sense of relief,” said Neil Resnick, a senior vice president in Grubb & Ellis’ Westside office. “Now that it’s apparently off, it’s back to business as usual, focusing on revenue generation.”
Grubb & Ellis on May 24 said it had called off merger negotiations with an unidentified company, widely believed to be C.B. Richard Ellis. It terminated the talks, it said, because of key differences between the two companies and the belief that too many employees would be laid off. But courtship has nevertheless roiled the firm, and there may still be a number of brokers in the L.A. office ready to move on.
“That’s a pretty good assumption,” said one local executive with a national real estate firm. “Grubb & Ellis’ financial constraints impacts their ability to do business.”
(Grubb & Ellis reported a net loss of $6.6 million for the first quarter ended March 31, compared with a net loss of $1.5 million for the like-year earlier quarter. First quarter revenues were $58.2 million compared to $80.1 million the year earlier.)
“It’s a fluid thing,” the executive said, “and the value of the business is in people.”
Joseph Gabbaian, another senior vice president at Grubb & Ellis’ Westside office, agreed that clearing the decks of the potential CB Richard Ellis deal which was widely expected to result in layoffs and cost-cutting at both firms removed a distraction. But he conceded it served to draw attention to the firm’s local talent. “It obviously heightens the awareness,” he said. “People start to pay attention to you.”
That attention, said Mark Robinson, corporate managing director for Julien J. Studley Inc., has heated up in recent weeks.
“Uncertainty breeds discontent,” he said. “Obviously they are in a highly dynamic place right now, and they know we are always looking for good people.”
Whether or not the firm’s talent would be receptive of offers remained to be seen, Gabbaian said. The firm received an equity infusion from one of its largest shareholders in May, and while there are no talks about a merger or sale now, should they arise again the response from the staff might be different.
“It depends who it is,” he said.
Meanwhile, said Robinson, “my guess is they are dialing and receiving more calls than normal.”
Sounds Good
Kenwood USA Corp., the Long Beach maker of audio components, has sold its 272,000-square-foot industrial building in Carson to pension fund advisor TA Associates Realty for $15.4 million.
The deal, brokered by Grubb & Ellis’ Kevin Shannon, John Lasiter and Frank Hilldebrand, involves a three-year sale-leaseback. Shannon would not divulge the value of the lease, other than to say it was “market rate.” Market rate in that part of the county is between 44 and 46 cents per foot per month.
Shannon was also involved in the sale of the 124,721-square-foot office building at 555 East Ocean Blvd. in Long Beach to a Brentwood partnership for $5.7 million.
The seller, Archon Group of Irving, Texas Archon, formed by Goldman Sachs in 1996, is also marketing the 46,500-square-foot office building at 615 Nash St. in El Segundo.
The buyer of the Long Beach property, which is 64 percent leased, is 555 East Ocean LLC of Brentwood.
The building sits on four parcels and is subject to a ground lease.
Shannon and David Coe of Grubb & Ellis’ South Bay office represented both the buyer and the seller in the transaction.
Design Forward
Old and new shared the limelight recently as the Los Angeles Business Council awarded two grand prizes at its 32nd annual Los Angeles Architectural Awards.
AC Martin Partners and Morphosis took the two grand prizes awarded May 15 for their respective Los Angeles City Hall Seismic Rehabilitation and the Caltrans District 7 headquarters designs.
Other winning projects included Daniel Rhodes & Associates and Carson Associates’ renovation of the tiny, 300 square-foot St. Matthew’s Parish Preschool in Pacific Palisades and HOK’s design of the 148,000 square-foot Los Angeles World Airports Cargo Building ‘A.’
Agilent Moves
Agilent Technologies leased 37,300 square feet at Westlake North Business Park at 30699 Russell Ranch Road in a five-year lease valued at $5.2 million.
Agilent has occupied a 53,000-square-foot space at 5601 Lindero Canyon Road, but never used all the space, said Dave Leit, vice president at CRESA Partners, who represented the tenant in the deal along with Bill Nichols, a broker with Corporate Services Consortium in Minneapolis.
“The facility they’re in needed some upgrades,” Leit said. “The economics didn’t warrant staying there.”
Tom Festa, Jim Lindvall and Sam Monempour, with Grubb & Ellis, represented the landlord, Investment Development Services.
Staff reporter Danny King is on vacation. San Fernando Valley Business Journal senior reporter Shelly Garcia contributed to this column.
