Another Westside office tenant has decided to leave its space as a result of spiking rents in the area.
CBiz Inc., a Cleveland-based business services firm, has signed a lease at 10474 Santa Monica Blvd. near Century City. The 10-year deal is valued at more than $13 million and closed in mid-September.
Blake Mirkin of CB Richard Ellis Group Inc. said CBiz decided to leave the World Savings Center at 11601 Wilshire Blvd. near Westwood because rents in that area are in the range of $5 to $6 per square foot. By contrast, it is renting its 29,561-square-foot Century City space for 10 years at $3.77 per square foot per month, a veritable bargain.
"They were looking at doing deals in excess of $5 per foot," said Mirkin, who represented the landlord, S.K.Y Cos., a real estate investment company. "It has become very difficult when rents are increasing by fifty percent."
Office rental rates across the Westside are rapidly increasing. For example, in Westwood, the average asking rate for Class A space was $5.60 in the third quarter, up from $3.43 a year ago, according to Grubb & Ellis Co.
CBiz will occupy about half of the 57,000-square-foot, four-story office building. CBiz will move into the building where it will have signage in January 2009.
As part of the lease agreement, the signage will face Santa Monica and Beverly Glen boulevards.
David Toomey and Roy Longman of Cresa Partners LLC represented CBiz along with CBIZ Gibraltar Real Estate Services LLC, an entity of CBiz.
Apartment Community Sale
Somerset on Garfield, a large 1940s apartment community in Montebello, has been sold for $39.3 million, or about $153,320 per unit. The deal between buyer Advanced Real Estate Services Inc., a Lake Forest real estate investment firm, and seller Kennedy Wilson Multifamily closed Sept. 28.
The expansive 12.5 acre property at 336 N. Garfield Ave. includes just 256 units a very low-density layout. There are just 54 one-bedroom units and 202 two-bedroom units, for an average rental rate of $1,256 per month.
Ron Harris of Marcus & Millichap Real Estate Investment Services Inc. said the buyer does not plan to add more units the project.
"There will be zero redevelopment, it just happens to be a low-density, well-landscaped, verdant property," said Harris who represented both sides of the deal.
Kennedy Wilson Multifamily, a unit of Beverly Hills-based real estate services company Kennedy Wilson Inc., renovated the property in the last couple of years and 70 percent of the units have been extensively upgraded, Harris said.
However, Advanced Real Estate Services will embark on its own renovation program by the end the year "to raise the quality of the building to an even higher level," Harris said.
Stewart Weston of Marcus & Millichap also represented both sides of the deal.
A 54-unit Koreatown apartment building, called Saint Charles Apartments, has traded hands in a deal that closed Sept. 13.
Buyer Lighthouse Group LLC, a local real estate investment group, paid $6.5 million for the four-story building at 240 S. Western Ave. The building, only 50 percent occupied, includes a 3,300-square-foot ground-floor retail component that is completely vacant.
The seller was Landmark Equity Management Inc., a Van Nuys-based real estate investment company. According to Brent Sprenkle of Sperry Van Ness Commercial Real Estate Advisors, Landmark Equity had racked up numerous code violations at the property for problems like bad plumbing and broken windows and heaters.
He said the seller was rehabbing the property but instead decided to sell it.
"Lighthouse Group will have to do a major rehab, starting in the next couple of weeks," said Sprenkle, who represented both sides of the deal.
Sprenkle said Lighthouse plans to bring boutique retail to the site, which has four retail pads.
Landmark Equity did not return calls seeking comment.
The average rental rate at the building, which has 52 studios and three one-bedroom units, is $750 per month. After renovations, Sprenkle expects the studios to rent closer to $1,000 per month and one-bedrooms around $1,200.
At $6.5 million, the deal breaks down to $108,000 per unit, a significant figure for an older building that does not include parking for tenants, Sprenkle said.
"It shows you Koreatown is a hot market for investors," he said.
The seller also represented itself in-house on the deal.
Staff reporter Daniel Miller can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 263.
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