A Culver City office warehouse has been sold for $8 million to a development team that plans to renovate it into a creative office campus.
A joint venture of Santa Monica’s Industry Ltd. and L.A.’s Saber Realty Advisors acquired the 30,000-square-foot industrial building at 5900 Blackwelder St. from Burke Williams Spa.
The 2.2-acre site is next to the 6.4-acre, 150,000-square-foot Blackwelder creative office campus, a former cabinet and furniture manufacturing facility that was renovated into creative office space for entertainment firms. Blackwelder, which was converted in 2008, is 90 percent occupied by media firms such as the Mill, Hungryman, On Board Entertainment and Bandito Films.
Industry Ltd. is an affiliated development company of office brokerage Industry Partners Inc., which was part of the leasing and design team that transformed the Blackwelder campus for owner Genton Property Group LLC.
Industry Ltd. is planning to build off the success of the Blackwelder project with a $3 million capital improvement program to convert the Burke Williams industrial building into creative office space, which would include building an additional 10,000 square feet of mezzanine space.
Tom Majich, director of development and construction at Industry, said the project should be attractive to growing creative firms.
“For tenants looking in Santa Monica, it’s hard to find a 30,000- or 40,000-square-foot building,” he said.
Indeed, creative companies have been looking to areas such as Culver City that offer ample amounts of space for rates lower than nearby Santa Monica. In fact, rates for creative space in Culver City were around $2.58 a square foot compared with Santa Monica’s $4.01 at the end of 2012, according to Industry Partners.
Industry, which hopes to finish its renovations by the end of the year, is seeking tenants for the project.
Architecture firm Unispace is opening a second L.A. office in downtown.
The Australian company signed a five-year lease with landlord Hines last month for more than 3,100 square feet at Citicorp Center at 444 S. Flower St. The deal was valued at approximately $1.2 million.
The company’s first L.A. office is in 20,000 square feet at 5450 W. 83rd St. in Westchester.
Ron Markham, L.A. managing director for Unispace, said the company has done more business in the first quarter of this year than it did in all of 2012. The growing demand has led to an office expansion here and elsewhere around the United States.
“We have some international clients that are downtown and we want a presence in the central business district, where we are doing a lot of Class A design work,” he said.
Jonathan Larsen and Katie Bernhisel at Cassidy Turley Inc. represented Unispace. Hines was represented internally by Alan Polley.
A report that Robert F. Maguire III planned to make a bid for the remaining portfolio of his former downtown real estate investment trust, MPG Office Trust Inc., sent the company’s stock up 7.5 percent last week.
Bloomberg News reported March 26 that Maguire, who founded the predecessor company to MPG but was ousted in 2008, was looking to make a bid for the company, which has been seeking a buyer or capital investor since last year to escape its mountain of debt. It agreed last month to sell its US Bank Tower to a Singapore company. After the deal closes it will own four office buildings in downtown and one in Pasadena.
Shortly after the report, the company stock rose to $2.70 on Tuesday from $2.51 the day earlier, as trading volume skyrocketed more than 1,000 percent.
Maguire valued the overly leveraged MPG at $2 billion, though he declined to state the value of his offer.
How he would finesse a deal is a question. He has had financial trouble of his own, including carrying a large debt load on all of his major assets, many of which have recently been sold, are underwater or are wholly or partially up for sale. Maguire said his interest in acquiring the portfolio isn’t emotional, and that he is talking with investors in the U.S. and Asia about a deal.
“There is significant interest from institutional and private investors,” he said. “You have to work your way through (the debt) but I think there’s equity in the portfolio.”
John W. Guinee III, managing director at Stifel Nicolaus & Co. Inc. in Baltimore who follows MPG, said it’s possible that Maguire could find a foreign billionaire willing to fund the acquisition, but that MPG would likely make a better return by selling its portfolio building by building.
“By our estimates, Mr. Maguire’s offer places very little value on the common shares, and based upon recent asset transactions, we think the board could generate a higher value to the common shares via the asset-by-asset liquidation strategy it already appears to have adopted,” Guinee wrote in a recent research note.
Staff reporter Jacquelyn Ryan can be reached at email@example.com or (323) 549-5225, ext. 228.
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