Audio equipment company Beats Electronics, which sells high-end headphones branded by rapper and music producer Dr. Dre, will move its headquarters from Santa Monica to Culver City next year.
The music electronics company has signed a 12-year lease for 109,000 square feet in the Hayden Tract, an old industrial district south of National Boulevard along Ballona Creek that has in recent years seen many of its warehouses converted into creative office space.
Beats, which occupies about 42,000 square feet at the plush Water Garden building in Santa Monica, will occupy a two-building minicampus under construction on 4.5 acres at 8550 Higuera St. and 8600 Hayden Place.
Landlord Hackman Capital Partners, a West L.A. real estate firm, broke ground on the adaptive reuse project last year and expects to complete construction and tenant improvements by April 1, when the Beats lease is to begin.
Micheal Geller, executive vice president at First Property Realty Corp. in Beverly Hills, represented Hackman in the transaction. He declined to disclose the value of the lease deal but said monthly rates for similar properties in the area average about $3.25 a square foot. That puts the value of Beats’ lease at more than $51 million.
Geller said Beats, which had been scouting locations for about a year, originally signed a lease in January for 66,400 square feet in three buildings in the Hayden Tract but backed out at the last minute.
“They were unable to occupy that facility because they had grown out of it by the time they needed to start construction,” he said. “Lucky for them we had a complex around the corner that was fitting of their image.”
Last month, Beats accepted a $500 million investment by asset management firm Carlyle Group in Washington for a minority stake in the business.
After quietly marketing a 49 percent stake in one of its L.A. office buildings all year, Boston real estate investment firm Beacon Capital Partners found a buyer.
New York real estate investment firm Madison International Realty announced last week that it had purchased a minority stake in One California Plaza, a 42-story office tower at 300 S. Grand Ave., for $295 million. That price values the 1.03 million-square-foot building at more than $600 million, or about $582 a square foot. The sale closed Sept. 26.
Beacon, which owns three Class A office towers in downtown Los Angeles, including the Aon Center at 707 Wilshire Blvd. and the Wilshire Grand at 600 Wilshire, originally acquired the trophy tower on Bunker Hill for just under $208 million about 18 months ago with joint-venture partner MPG Office Trust Inc.
MPG, which began selling off many of its assets after major losses during the recession, sold its stake to Beacon in December.
Ronald Dickerman, president of Madison, said plans to further up the property’s value include renovating the lobby and signing tenants for two vacant floors at the top of the building.
“It’s a three- to five-year plan,” he said.
Avenue of the Stars, the short Century City street that runs for less than a mile through the heart of the towering Westside office district, is the most expensive single street for office space in Los Angeles County and the eighth most expensive nationwide.
A Jones Lang LaSalle Inc. report ranking streets in 40 office markets across the United States by average rent per square foot found Avenue of the Stars ranked behind three streets in the Bay Area and four on the East Coast.
Annual rents in office buildings with addresses on Avenue of the Stars last year averaged about $60 a square foot, or $5 a square foot each month. The most expensive average rental space in the country can be found on Menlo Park’s Sand Hill Road, where annual rents average about $111 a square foot.
Avenue of the Stars, which connects Santa Monica and Pico boulevards, is home to seven large office buildings, including the 39-story SunAmerica Center at 1999 Avenue of the Stars and the 34-story Fox Plaza at 2121 Avenue of the Stars. The affectionately dubbed “Death Star” building, home to talent agency CAA, is also on the street at 2000 Avenue of the Stars.
Craig Kish, a senior vice president at Jones Lang LaSalle who represents tenants looking for space on the Westside, said executives who live in Brentwood and Beverly Hills are drawn to the cluster of Class A trophy towers that line the street because they’re convenient and distinctive.
“There’s always been an allure with Century City because it’s sort of the downtown of the Westside,” he said.
Staff reporter Bethany Firnhaber can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 235.
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