A sprawling office campus in West Hills has been sold for $92 million, the largest office sale in the market in more than a decade.
New York real estate investment and development company Brookfield Office Properties Inc.’s Opportunity Fund bought the 987,428-square-foot Corporate Pointe complex at 8501-8531 Fallbrook Ave. from Toronto’s Bentall Kennedy, which bought the property for $92.1 million in 2002, according to Costar Group Inc.
The late January deal marked the highest sale price of an office property in the San Fernando Valley and surrounding suburban markets since Bentall Kennedy’s purchase of the property 11 years ago.
The 10-building, 80-acre campus has been built in phases since 1956. It includes a 144-seat theater, a café and landscaped courtyards. It still has entitlements for an additional 360,000 square feet of office space and a 969-space garage.
The sale was part of Bentall Kennedy’s program of selling off suburban office buildings and shifting its portfolio to urban properties.
Brookfield was interested in the property for its value-add opportunity and plans to use the entitlements to build out the campus. It also plans to conduct upgrades to the property that it believes will allow increased rents and occupancy over the next several years. The campus is only 53 percent leased to tenants including QBE First, Quest Diagnostics and Bank of America Corp.
Brookfield owns some of downtown L.A.’s core office buildings, including the 1.4 million-square-foot Bank of America Plaza at 333 S. Hope St. and the 1.2 million-square-foot Ernst & Young Plaza at 725 S. Figueroa St. The Brookfield Opportunity Fund has been seeking value-add properties around Los Angeles and the country as the real estate market recovers.
CBRE Group Inc. Vice Chairman Kevin Shannon, who represented the seller, said the deal is an example of growing interest in Los Angeles from out-of-state buyers.
“There’s a general sense that Los Angeles has passed the bottom and the fundamentals of the market will continue to improve, so there’s a lot of value-add capital that wants to be in Los Angeles,” he said. “When Los Angeles bounces, it bounces quickly so there’s a sense that it’s a good time to buy.”
CBRE’s Tom Bohlinger, Ken White and Michael Longo also represented the seller. The buyer was represented in-house.
Robert Sulentic has become chief executive of West L.A. brokerage CBRE Group Inc. after Brett White officially stepped down from the position last year.
Sulentic was most recently president of CBRE, a position he will retain. He has also served as the company’s chief financial officer. Sulentic joined CBRE with its 2006 merger with Trammell Crow Co., where he was chief executive. With his new position he has also joined the company’s 11-member board.
The executive moves were not a surprise. The company announced the pending transition in May when White, 52, was re-elected to the company’s board. White announced he was resigning his board seat Jan. 24.
White, who had been chief executive since 2005, said he was leaving his position because he had completed his goal of turning CBRE into a preeminent global commercial real estate services firm with the acquisition of ING Group N.V.’s real estate investment management operations in Europe.
“We have executed our plan considerably ahead of schedule, and have achieved the long-term vision of becoming the world’s leader in commercial real estate services,” he said in a statement last year. “This is good news for CBRE, our clients, employees and shareholders. It is also good news for me, as I can embark on my next business chapter at a time when the company is in the best possible position.”
He retired from his position in November.
Sulentic said he is looking forward to his new responsibilities.
“I am deeply honored to succeed Brett as CEO,” Sulentic, 56, said in a statement. “I look forward to working with our 34,000 global professionals and the board to build on the success that Brett has helped us to achieve.”
Developers are optimistic that the L.A. office, industrial and multifamily markets will remain resilient for the next three years, according to a new Commercial Real Estate Survey forecast report from downtown L.A.-based law firm Allen Matkins Leck Gamble Mallory & Natsis LLP and UCLA Anderson Forecast.
The report, which surveyed about 50 development firms in November, suggests developers believe the L.A. office market will show vacancy rates rising very slightly while rental rates climb in Los Angeles County by this spring.
That is rarely how those metrics correlate, but John Tipton, a real estate department partner at Allen Matkins, said Class A space expected to come on the market in the next three years is likely to have higher asking rates.
“More developers have been taking notice that market conditions now justify demolishing older structures and taking steps to build new ones,” he said. “People are willing to pay for quality.”
Meanwhile, vacancy is expected to decline while rates rise in both the industrial and multifamily markets.
The forecast suggests the optimism is based on economic and employment growth in California overall that is exceeding the rest of the nation.
Staff reporter Jacquelyn Ryan can be reached at email@example.com or (323) 549-5225, ext. 228.
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