CNN executives are close to deciding whether the cable news channel will pull the plug on its signature Hollywood offices.
The Atlanta-based unit of Time Warner Inc. has hired a real estate broker and issued a request for proposals from other potential landlords, according to sources close to the situation.
CNN now leases little more than 32,000 square feet at 6430 Sunset Blvd., a 14-story building also known as Sunset Tower. CNN’s brightly lit logo tops every side the building.
The news channel’s space is also home to its West Coast broadcast studios and the “Larry King Live” show. Messages seeking comment from CNN and its broker, Robert Chavez, weren’t returned.
Bob Scanlan, a principal with the building’s owner, ScanlanKemperBard Cos., said negotiations with CNN are continuing. A final decision is expected in two weeks. “As far as we can tell they have been happy,” he said. “We have made them a very attractive offer.”
Still, Scanlan concedes that CNN’s office space needs to be renovated and upgraded, and the company may not want to run its television operations with construction under way. “In their business, it’s not necessarily advantageous to have hammers pounding in the background,” he said.
CNN leases a little more than 16 percent of the building, which ScanlanKemperBard purchased a year ago for $34 million. CNN pays $119,000 a month for its four suites and signage rights, according to the building’s rent roll.
Despite losing a significant tenant, Scanlan said if CNN were to leave, it would allow a thorough renovation of the office space and bring in a user that doesn’t require a 24-hour operation. “They are a very intensive user,” he said. “While we would be thrilled if CNN would stay, they are a relatively expensive tenant in regards to use of energy and that type of thing.”
Making a Pointe
Meanwhile, ScanlanKemperBard has entered into an agreement to purchase two office buildings in Culver City’s Corporate Pointe business park for $39.8 million.
Scanlan said his company is buying 200-300 Corporate Pointe from New York-based real estate investor Praedium Group LLC. The buildings consist of 204,000 square feet on slightly more than 4 acres.
The buildings are 85 percent leased to tenants that include State Farm, University of Phoenix and Shiseido Cosmetics. Scanlan said the company already has 22,000 square feet of leases in negotiation. “We could be at 90 percent (occupancy) in 90 days,” he said.
The company was interested in buying in the Corporate Pointe area for some time because of its Westside location and proximity to Los Angeles International Airport but at rents much lower than Santa Monica. “The location is awesome,” Scanlan said. “We love Culver City. We think you can be in a very attractive location at a very attractive rent.”
Scanlan said the company believes the facility will benefit when Symantec completes a new building in the business park. The Cupertino-based software maker is expected to break ground this fall on a $140 million building housing 2,200 employees.
The move will give other companies confidence in the area and attract new tenants who want to be near Symantec, Scanlan said. “We see lots of upside here,” he said.
Westside Remake
Broadreach Capital Partners LLC paid $30.5 million to acquire a 151,000-square-foot West Los Angeles office campus near the Santa Monica border.
The Palo Alto-based company is buying the complex comprised of five three-story office structures at 12233 Olympic Blvd. from Alliance Commercial Partners.
To attract new tenants to the buildings, which are 48 percent occupied, Broadreach is planning a $4 million renovation of the campus that will open up the structures to a central courtyard.
“It’s an underperforming asset, because it hasn’t been positioned properly for the market it’s in,” said David Simon, managing director and head of the Southern California operation. “It needs to appeal to a certain tenant type and repositioned to attract the entertainment-type firms.”
A fine dining restaurant is also slated for the project and the company is already having discussions with several upscale operators, Simon said.
Broadreach plans to rename the offices, which are currently known as Tribecca Plaza. “We’re going to brand the building to make it more identifiable,” Simon said.
Office buildings close to the Santa Monica and Los Angeles border have some of the highest asking rents and tightest occupancy rates of any submarket in the county.
Over the past year, Broadreach has been a busy buyer of below-market performing assets across Southern California and the western half of the country. Locally, the company has purchased Park Place in Culver City and 3330 Cahuenga Blvd. in Universal City.
“Our specialty is creating value,” Simon said. “In this deal, there’s a lot of value to create.”
Maguire’s New Deposit
The Bank of Tokyo-Mitsubishi has renewed its lease at 777 Tower in a deal valued at approximately $15 million.
The bank will continue to occupy slightly more than 34,000 square feet on the building’s fifth and sixth floors for another 10 years.
The nearly 1.1 million-square-foot 777 Tower was recently purchased by Maguire Properties Group Inc. as part of its $1.5 billion acquisition of CommonWealth Partners LLC’s portfolio.
“The timing was excellent for the bank to restructure the lease due to the sale to Maguire,” said Jonathan Larsen, a principal with Trammell Crow Co., who along with colleague J.D. DeRosa represented the bank. Peter Johnston, a CommonWealth principal, represented the landlord.
The Bank of Tokyo-Mitsubishi is set to merge with UFJ Financial Group in October 2005, which will make the combined entity, based in Tokyo, the world’s largest bank.
