Herbalife in Talks for Construction of New Headquarters

0

A blockbuster of a deal is developing at the Howard Hughes Center, the office complex just off the San Diego (405) freeway in West Los Angeles.


Center owner Arden Realty Inc. is negotiating with Herbalife Ltd. to build a 212,000-square-foot headquarters for the company, according to several sources close to the deal.


Arden spokeswoman Brooke Lauter confirmed that the two companies are talking, but declined to comment further. “Discussing Herbalife negotiations right now is premature,” she wrote in an e-mail.


The two sides have been talking for several weeks, but negotiations recently turned serious, the sources said. Some sources said Arden has a signed letter of intent, but others say Herbalife is still looking at other options.


Herbalife spokeswoman Barb Henderson said the company didn’t “have information for a real estate story.”


The sources said Herbalife, which has been on the market for roughly 200,000 square feet for nearly two years, wants to resolve its headquarters location by year’s end. The company is based in Century City and leases a building in El Segundo for back office operations.


If a deal can be hammered out, the Herbalife building would be next to Univision Communications Inc.’s offices and, like Univision, it would have building-top signage and freeway frontage. Herbalife would move out of its Century City digs but retain its El Segundo space.


A build-to-suit would require at least a 10-year deal and rents would likely range from $3.25 to $4 a square foot, market sources said. That places the value of a potential deal starting at $82.7 million.


Staubach Co.’s John McRosky, who is representing Herbalife, didn’t return messages. Arden is being represented internally by Scott Chalmers, who also didn’t return calls.


Separately, Arden is moving forward with plans at the Howard Hughes Center to build a 160,000-square-foot office building on spec, meaning that the real estate investment trust doesn’t have a lease with an anchor tenant.


Westside landlords like Arden are feeling confident that vacancy levels will continue to drop, allowing them to command higher rents at their buildings in the next several quarters.


Office markets in Santa Monica, Beverly Hills, Brentwood and Westwood are filling quickly. Arden is banking on that tightening office market pushing deals into Century City, which has the highest vacancy rates on the Westside, and its Howard Hughes Center.



Plan Check


After jousting with Westwood community groups over the Palazzo Westwood mixed-use project, billionaire developer Alan Casden is seeking some changes.


Casden Properties Inc. has filed plans with the city seeking permission to add more underground parking to the development. The extra parking is needed for Casden to change the project’s 350 residential units into for-sale condominiums.


Howard Katz, Casden’s vice president of development, said the company still intends to open the housing as luxury apartments, although those units are also being built to condominium standards.


“It basically gives us flexibility for a conversion in the future,” Katz said. “We decided to bite the bullet and do the design changes up front now.”


Katz said Casden has been receiving inquiries on condo purchases. “Most of the calls about the project have been from people wanting to see if they’re condos and if they can get on the waiting list,” he said.


Sandy Brown, one of the community group leaders, said that unlike some of Casden’s prior requests, she didn’t have any problems with the extra parking or the units becoming condominiums. “I think it’s good,” Brown said. “We like condominiums because they are a little more settled than the in-and-out nature of apartments.”


Many developers believe apartments are easier to get approved by city governments. But once developers get their approvals, they often opt to convert the entitlements a process that doesn’t require council approval to for-sale units to capitalize on L.A.’s sizzling housing market.


Denise Sample, Councilman Jack Weiss’ chief of staff, said her office was aware of Casden’s intentions with Palazzo Westwood. “At this point we haven’t taken a position,” she said. “Right now we’re working with both sides to make sure they are on the same page.”


The $100 million Palazzo Westwood project, which will also contain 50,000 square feet for retail, is currently under construction on either side of Glendon Avenue.


Katz said Palazzo Westwood was designed in such a way that the retail and residential components would be kept separate. Essentially, that means Casden could easily hold or sell the retail portion if the company is allowed to change the residential to for-sale units.


“It gives us the best of all worlds,” he said. “There’s one interest in apartments and one in the commercial area.”



L.A. Law


Law firm Burke Williams & Sorensen LLP has inked a $6.5 million lease for 24,506 square feet in the Citibank Center at 444 S. Flower St.


The 78-year-old firm is departing from its current offices at 611 W. Sixth St. due to that building’s plans for conversion of the upper floors to condominiums.


Beacon Capital Partners LLC paid $175 million less than two years ago for the 891,000-square-foot building, which was featured as the location of the fictional firm in the TV series “L.A. Law.”


Beacon originally had been under contract to buy a 50 percent interest in the building from Grosvenor USA, the American arm of a British real estate investment firm. It later secured the balance from Meiji Seimei Realty.


The 10-year lease with Burke Williams & Sorensen brings the building’s occupancy above 95 percent. The landlord was represented by John McAniff and John Eichler at Cushman & Wakefield Inc.


Burke Williams & Sorensen was represented by CB Richard Ellis Inc.’s Clay Hammerstein, John Zanetos and Stephen Bay.



*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at

[email protected]

.

No posts to display