Real estate investment firm DivcoWest doubled its footprint in Los Angeles last week as it swept up two office buildings in deals worth about $232 million.
The San Francisco firm purchased the Telephone Building in Santa Monica for $52.5 million and the Glendale Plaza in Glendale for $179 million, according to sources familiar with the transactions. Both properties are almost fully leased.
In a statement confirming the deals, Divco Managing Director Michael Provost emphasized the company’s confidence that employers located in both neighborhoods are positioned to attract and retain talent.
The company declined interview requests.
Divco, which manages more than $2.5 billion in equity, also owns an office complex in El Segundo and one in Playa Vista. It sold Gateway El Segundo in November for $120 million and the Pasadena Business Center in June for $67 million.
The company and its affiliates manage funds from institutional investors and high-net-worth families. It does both asset and property management, and has acquired more than 30 million square feet of commercial properties since its founding in 1993. Current holdings – mostly office buildings – are clustered in Austin, Texas; Boston; the Silicon Valley; and Los Angeles.
The Santa Monica and Glendale deals set up Divco in two office markets that are unlikely to see new construction anytime soon, although for different reasons. Santa Monica is tight on space and tough on development. Glendale has space to spare but office rents would need to double in order to justify construction costs.
Calling Santa Monica
Provost highlighted the squeeze on the office market in Santa Monica as a key reason to pick up the Telephone Building, a recently renovated six-story property a half-mile from the beach at 1314 Seventh St., near Arizona Avenue.
“The Telephone Building is an irreplaceable, top-grade commercial asset in a severely supply-constrained submarket of Los Angeles,” he said in the statement.
The building’s ownership is unusual in that the property was divided into condominium units in 2012. Verizon California Inc. retained a portion of the building that is used for switching equipment and sold a 58,540-square-foot condominium interest to Pacshore Partners and Alcion Ventures for $19.5 million through an entity called Alcion PS Santa Monica Owner, according to public records. The Verizon interest is now owned by Frontier Communications, which bought that company’s wire-line operations in California last year.
The $52.5 million price tag for the section sold to Divco equates to $897 a square foot, on par with several other recent office sales in the beach city, including Colorado Center’s sale in May of a 50 percent stake for $863 million, or $863 a square foot. The Lantana campus followed in November for $400 million, or $825 a square foot.
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