Bank of America Corp. has signed a 10-year sublease valued at $28 million for space in downtown's Garland Center with Charter Holdings Inc.
The deal for 83,000 square feet at the nine-story building closed on Sept. 6 and breaks down to $2.81 per square foot per month.
The bank will not operate a retail branch at the 1200 W. Seventh St. site. Instead it will use a 60,000-square-foot cash vault at the building, which was built by First Interstate Bancorp two decades ago. The remainder of the space will be used for check processing and there is also a small office component, said Jason Warner of CB Richard Ellis Group Inc.
Warner represented Charter Holdings, a subsidiary of Wells Fargo & Co. that has a master lease with the building owner and private investment partnership Trumbell & Associates LLP.
After building the tower in the mid-1980s First Interstate sold it to Trumbell while retaining ownership of the land to finance a possible acquisition of Bank of America, which failed, Warner said. Later, Wells Fargo acquired First Interstate and the master lease on the building. Consequently, Trumbell now leases the land from Wells Fargo.
Upon completion of the Sept. 6 lease with Bank of America, Charter Holdings exercised two five-year options to extend its lease with Trumbell. The terms of that deal have not been disclosed.
Other tenants at the building include the City of Los Angeles and JPMorgan Chase & Co.
Charter Holdings plans to spend about $30 million to improve the infrastructure of the 740,000-square-foot building, focusing on improving three levels of subterranean data center space totaling 200,000 square feet, Warner said. All but about 10,000 square feet of the data center space is occupied.
Warner's brother Nick, also of CB Richard Ellis Group, represented Charter in the deal. John McAniff and Jeff Ingham of Jones Lang LaSalle Inc. represented Bank of America.
When it comes to redeveloping the 10-acre Hollywood parcel that includes the famed Magic Castle, it may not be as simple as "open sesame."
That phrase, the password for a sliding bookcase entrance to the magic clubhouse, won't open any doors for a prospective buyer hoping to get the project entitled for development.
It was announced this summer that the property at the base of the Hollywood Hills, which also includes Yamashiro restaurant, would be sold by the Glover family, the longtime owners of the site. Bids are said to be in the $70 million range. The property also includes lesser-known apartment buildings and two hotels. Offers are due Sept. 28, said Marc Renard of Cushman & Wakefield Inc., who has the listing.
However, Hollywood real estate players say that the site is complicated and the historic nature of the magic clubhouse and the restaurant which wouldn't change in their uses make it a tricky proposition.
"Most of my clients who are existing developers in Hollywood are reluctant because it requires density to be put on that site to justify (the price)," said John Tronson, a principal in the Hollywood office of Ramsey-Shilling Commercial Real Estate Services Inc. "Because of hillside construction, historic issues and ingress and egress, many of the larger developers are reluctant to try to get a project that controversial entitled."
The best redevelopment play appears to be for more hotel development at the site. Renard said that the property has attracted "worldwide interest" and that a redevelopment plan would make the site more upscale.
"The concept is to create a world class destination that would include the existing hotels and restaurants and perhaps additional density in the form of more hotels," Renard said.
Tronson, a Hollywood real estate expert, said that a prospective buyer would have to battle neighborhood groups to get a project approved.
"A few clients we've represented have said, 'You are going to get into a knock-down drag-out battle with some of the local neighborhood groups and you need their support,'" he said.
The Magic Castle, which is the headquarters of the Academy of Magical Arts Inc., was built in 1908 and turned into a magic clubhouse in 1963 by owner Thomas O. Glover.
Kearny Real Estate Co. LLC is tilting the walls on a new phase of its Century Business Center industrial office complex next to Hawthorne Airport.
Los Angeles-based Kearny, in partnership with a Morgan Stanley real estate fund, bought the industrial complex in 2005 from Vought Aircraft Industries Inc. for $65 million. Since then the partnership has rehabilitated the 86-acre complex and is now is adding 21 buildings at a cost of $45 million. It is slated to be completed by January and will include buildings that range in size from 5,700 to 20,700 square feet.
The buildings, which are targeted at smaller, high-end industrial users, are priced at about $225 per square foot, said Hoonie Kang, a partner with Kearny.
"A lot of owners in the beach communities are getting priced out of their own communities, with prices in Santa Monica and Manhattan Beach in the $500 to $600 a foot range," said Kang.
All of the existing buildings at the business center, which total about 785,000 square feet, have been sold or leased to various businesses, including a rocket manufacturer and a car racing team.
Kearny controls Hawthorne Airport through a ground lease it negotiated with the City of Hawthorne in 2005.
Staff reporter Daniel Miller can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 263.
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