Rand Corp. Expected to Stay at Its Home by the Sea
By DANNY KING
Rand Corp., which has been on a two-year search for a new corporate headquarters, will build its new home on land adjacent to its Santa Monica facility, according to a source close to the process.
The think tank, founded in 1948, is close to finalizing plans to construct a 309,000-square-foot complex on the company-owned site just south of its existing corporate headquarters at 1700 Ocean Ave., the source said. Rand's 50-year-old headquarters complex, on 11.3 acres of city-owned land, would be razed.
As recently as two months ago, Rand had considered purchasing an existing building, according to local real estate sources. Two of the properties discussed were the 285,000-square-foot office building at 6100 Center Dr. at Howard Hughes Center, which was just completed by Arden Realty Group Inc., and at least one of the six buildings at MGM Plaza in Santa Monica, which is owned by Tishman Speyer Properties.
Officials from Rand and Tishman Speyer would not comment on the process, and Arden Realty officials did not return calls.
In discussing the possibility of a new complex, Rand's Web site said any new project would have large hallways, courtyards and more common areas than traditional office buildings. Those requirements had one party calling the tire kicking of existing properties an exercise in futility.
The source added that given the idiosyncrasies of Rand's proposed design, the building would be difficult to sell to a more conventional office user. "There's not a real exit strategy," said the source.
Rand began planning the replacement of its headquarters when Santa Monica purchased the 11.3-acre headquarters campus from Rand in April 2000 for $53 million. About 1,100 people work at the Santa Monica headquarters, which is now leased from the city.
Building on the 3.7-acre site could run more than $225 a foot, according to sources, putting the cost of the new building at $70 million.
"You can buy existing buildings for $200 to $300 a foot and they're already up and going," said Bob Safai, president at Madison Partners. Based on that calculation, buying an existing 300,000-square-foot site could range from $60 million to $90 million. Rand's 3.7-acre site, valued at $16 million, would be sold if it purchased an existing building.
Still, the lure of developing a custom-designed facility next to its longtime home appears to be great enough to outweigh the economic concerns related to new construction. "That's a campus by the ocean," said Safai. "There aren't too many of them around."
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