There's an old adage that government can become a safe haven for developers and landlords to ride out the storm during real estate busts. One recent deal shows just how.

While commercial real estate activity has slowed to a crawl, Torrance-based developer Mar Ventures Inc. worked out a deal with the U.S. General Services Administration, which is leasing space from Mar at a build-to-suit facility in El Segundo.

The GSA, the federal government's asset and commercial real estate manager, signed a 15-year lease for a 32,980-square-foot building at 1700 E. Grand Ave. Mar is constructing the $7 million facility, which will house the Los Angeles United States Military Entrance Processing Station, where new members of the Armed Forces will be processed.

The building should be ready for occupancy in August. The facility replaces the old L.A. Military Entrance Processing Station at 5051 Rodeo Road in Baldwin Village.

Bill Messori, senior vice president at Mar, said that the company had originally planned to build six office condo buildings on the property before opening discussions with the GSA. He noted that the GSA deal was the best opportunity for Mar.

"In today's environment a GSA lease would be considered a safe haven," Messori acknowledged.

The value of the lease with Mar's limited liability company, Mar Canyon Grand LLC , wasn't disclosed.

Mar's broker, Terry Reitz of Grubb & Ellis Co., said the security of a long-term government lease is very valuable in the current recessionary real estate market.

"If there was anyone you want to have as a tenant it would be the government in a time like this," Reitz added.

Jim Biondi, Jeff Smart and Gerald Kim also represented the landlord.

Shadd Walker of Colliers International represented the GSA.

Studio Action

Warner Bros. Studios has expanded its presence in Burbank.

Warner Bros. Entertainment Inc., a Time Warner Inc. subsidiary that holds property, signed a Jan. 1 lease that expands and renews its occupancy at 3601 W. Olive Ave. across from the main studio lot.

The six-year lease is valued at roughly $7.5 million with an undisclosed lease rate. The building is owned by the Screen Actors Guild Administrative Corp., the pension fund of the Screen Actors Guild, which is managed by JPMorgan Chase & Co.

The studio already had two blocks of space at the 152,000-square-foot, Class A building, including five years remaining on a 40,000-square-foot lease for space on the seventh and eighth floors. The lease renews 17,000 square feet on the ground and fifth floors, and 10,000 square feet on the fifth and sixth floors, said Brad Feld of Madison Partners.

"From our perspective it was a commitment to the Burbank media district and our building, which has provided them a nice home across from the studio lot for many years," said Feld, who represented the landlord.

The property is undergoing a $2.5 million renovation to be completed this month that upgrades the lobby and exterior. With the extension, the building is now fully leased.

"We are thrilled to have their continued occupancy," said Karen Wilbrecht, vice president of real estate for JP Morgan Investment Management.

Warner Bros. declined to comment.

Chris Keller of Madison Partners also represented the landlord and Matt Hargrove of Cushman & Wakefield Inc. represented Warner Bros. He was not available for comment.

Studley Stores

With slow sales causing retailers to go belly up across the nation, it wouldn't seem like a good time to start a retail practice. But that's exactly what Studley Inc. has done.

The New York-based commercial brokerage has decided to start its first-ever such practice, and it will be in Los Angeles where a veteran broker has jumped ship.

Bill Bauman left Colliers International last month after 15 years to start the National Retail Services Group at Studley, where he was given the title of executive vice president. He brought his old Colliers team of brokers with him and the group will handle all facets of the retail brokerage business, from tenant and landlord representation to retail investment sales.

The 13-person team will initially include 10 brokers five in the Studley office in downtown Los Angeles and five in an Irvine office. Bauman, based out of Los Angeles, said he left Colliers on good terms and merely wanted a new challenge.

"I liked (Studley's) national presence and the quality of the relationships with regards to principals in the real estate industry," said Bauman. "Also, just the challenge of growing a retail group organically was very appealing to me."

Mark Sullivan, executive vice president and regional manager in Southern California for Studley, said that the group hopes to have a total of 25 to 40 brokers in major markets across the country by year's end. "We are actively pursuing retail professionals in place like Washington, D.C.; Dallas; Chicago; Miami; and New York City," Sullivan said.

He added that Studley sought Bauman out because he and his team from Colliers could offer a chance to become competitive quickly.

"You need to make a move that gives you an immediate base," Sullivan said. "There are very few groups or companies that have more capable people than Bill and his team."

Staff reporter Daniel Miller can be reached at dmiller@labusinessjournal.com or (323) 549-5225, ext. 263.

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