Building Sold Twice During Lease Renewal Negotiations

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Two strikes, then Clay Hammerstein hit the lease deal out of the park.

An executive vice president with CB Richard Ellis Group Inc., Hammerstein represented law firm Hughes Hubbard & Reed LLP in a $13 million lease renewal for 36,473 square feet of space at Two California Plaza downtown.


The deal with building owner Maguire Properties Inc. closed in late April.


However, Hammerstein had worked on various permutations of the deal with the two preceding owners of the 350 S. Grand Ave. high rise.


It was all the result of the wild and wacky world of commercial real estate, where buildings frequently change hands.


“This is the first time I’ve dealt with three owners in one negotiation,” Hammerstein said. “But all deals are exhausting in one way or another.”


Hammerstein began negotiating the 10-year renewal about six months ago with then building owner Equity Office Properties Trust. But, when that deal was nearing completion, Equity Office was purchased by private equity firm Blackstone Group LP in February.


Hammerstein said that once Blackstone became the property owner the deal was “favorably restructured” for the New York-based law firm, but Blackstone’s ownership was short-lived. Later in February, Maguire announced it was purchasing Two California Plaza from Blackstone along with several other buildings for about $3 billion. That deal closed this spring and again Hammerstein had a new negotiating partner. Fortunately, at that point, much of the legwork had already been done.


“It can be a process, especially when buildings are changing hands so frequently these days,” said Josh Wrobel, vice president of leasing for Maguire, who represented his company.


The deal at the 52-story building breaks down to about $2.97 per square foot per month. CB Richard Ellis Group’s Steve Bay and Kevin Bender also represented the law firm in the deal.



Downtown Lease

Another law firm, Hill Farrer & Burrill LLP, has signed a 10-year lease renewal for about $12 million to remain at Maguire’s One California Plaza.


The deal for 36,623 square feet of space in the Class A building breaks down to about $2.73 per square foot per month.


“We looked at other options in Class A buildings,” said Hammerstein of CB Richard Ellis Group, who represented the law firm in the transaction. “But their space is pretty efficient and they like the building.”


The deal closed in late May. According to Hammerstein, the law firm plans some cosmetic upgrades.


One California Plaza is located at 300 S. Grand Ave.


Bay and Bender of CB Richard Ellis Group also represented the law firm. Wrobel represented Maguire in-house.



Rail Adjacent

Marina del Rey-based real estate developer Second Street Ventures and real estate investment management company AEW Capital Management LP have teamed up to purchase a development site in Culver City for $8.25 million.


The deal with seller Betts Real Estate Partnership for nearly 2 vacant acres at 9919 Jefferson Blvd. closed May 17.


Second Street plans to develop a low-rise office campus on the site and expects to complete the project in two years. The property lacks entitlements.


“I think the Culver City market has matured into a destination for office in its own right,” said David Jordon, a principal at Second Street. “It is as legitimate a location as any other on the Westside.”


The 115,000-square-foot project will be marketed at creative office users, said Adam Browning, another Second Street principal, who added that the redevelopment of downtown Culver City has been a boon for the area.


“The redevelopment agency did a wonderful job in the downtown core,” he said.


In the last few years Culver City has become a haven for creative office users and has become a hip, less expensive alternative to other office submarkets on the Westside.


The Marina and Culver City office market had an 8.1 percent first quarter vacancy rate, according to Grubb & Ellis Co. The area’s average asking rent for Class A space was $3.29 per square foot per month, up from $2.60 a year earlier.


Browning said that it should take about nine months to get the parcel entitled for the office development. He noted that Culver City has a “great amenity base” and the development will be located near a proposed Expo Line light-rail stop.


“It has great access to freeways and other parts of the Westside,” he said.


The deal marks the third time in the last 18 months that Second Street and AEW have teamed up to purchase property.


Dan Spell of NAI Capital Commercial represented the seller in the deal. Second Street Ventures represented itself and AEW in-house.



Staff reporter Daniel Miller can be reached at

[email protected]

or (323) 549-5225, ext. 263.

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