Candle Corp. Deal Clears Way for Big Northrop Lease
by Danny King
Software company Candle Corp. is close to signing a lease at Pacific Corporate Towers in El Segundo for its new corporate headquarters. The deal would clear the way for Northrop Grumman Corp. to take nearly all of the 335,000 square feet Candle occupies at its existing headquarters at 201 N. Douglas St.
Candle’s new lease, at 100 N. Sepulveda Blvd., would be for more than 100,000 square feet over four or five years, and would be worth about $12 million, according to South Bay real estate sources.
“It appears they are focused on this building,” said Grafton Tanquary, senior vice president at CB Richard Ellis and representative for the unidentified pension fund that owns Pacific Corporate Towers.
CB Richard Ellis Senior Vice President John Ayoob, who, with CB Richard Ellis’ John McRoskey, represents Candle Corp., would not comment on the transaction. Candle spokes-man Barry Sulpor denied any transaction has been finalized.
The deal would be a boon to the 1.5 million-square-foot Pacific Corporate Towers, which is 27 percent vacant, as well as to a South Bay office market that has endured five consecutive quarters of negative absorption. Hughes Electronics Corp. and NCR Corp. each lease about 100,000 square feet in the complex.
Northrop Grumman’s deal for the Douglas Street site had been contingent upon Candle Corp.’s finding a new location for its headquarters, according to Hunt Barnett, senior managing director at Insignia/ESG and, with CB Richard Ellis’ Stan Gerlach, Northrop Grumman’s representative. Though Barnett would not comment on the value of Northrop’s lease, sources peg its value at about $45 million.
The “next best” areas appear to have the best buys.
A study of median housing prices in L.A. County for the month of March reveals that home appreciation in tony communities like Pacific Palisades, Rancho Palos Verdes and the greater part of Beverly Hills continues to lag behind a still strong housing market.
While countywide home prices in March were 15 percent higher than a year earlier, communities like Topanga, northwest San Pedro and south Beverly Hills far outpaced that appreciation, according to DataQuick Information Systems.
“Buyers usually look in Malibu and the Palisades first and get frustrated with the pricing,” said Jon Saver, a broker with Prudential Malibu Realty in Topanga. “Then they come to Topanga for value.”
As a result, the median price of a home sold in Topanga was 39 percent higher than the year-earlier period, while Pacific Palisades was up 11 percent (after two consecutive months of year-to-year median price decreases) and Malibu was flat.
“Even though prices are jumping, it’s still a good buy for people,” said Paul Ferra, an agent at Coldwell Banker Topanga. Ferra said many of his clients are entertainment types looking for a quieter alternative to communities like Santa Monica and Venice.
A similar pattern can be seen in Beverly Hills, where median home appreciation in the area south of Wilshire Boulevard and west of Doheny Drive was up 40 percent, while prices in the rest of the city declined by 7.7 percent over March 2001. In the South Bay, northwest San Pedro had a 23 percent increase (following a 49 percent year-to-year increase in February) while the median home price in neighboring Rancho Palos Verdes was up just 4 percent.
“People move on up the hill (into Rancho Palos Verdes) that is, most people do as their income increases,” said Bud Brown Realty owner Bud Brown. “Now they’re not moving up there as fast.”
Well, at least someone’s going to use it.
IBM Corp. is subleasing two-thirds of its highly acclaimed but little-used e-Business Center offices in Santa Monica to Game Show Network. GSN will be taking 35,000 square feet at 2150 Colorado Blvd., which is part of Equity Office Properties’ Arboretum Courtyard complex, through the end of IBM’s primary lease, which ends at the end of 2006.
“They’re really ramping up,” said John Bertram, executive vice president at Coldwell Banker Westmac who represented GSN. “Their viewership is really growing.” The network is a joint venture of Sony Pictures Entertainment and Liberty Digital Inc.
Neither Bertram nor CB Richard Ellis Co.’s Steven Salas, who, with Robert Waller, represented IBM, would disclose financial terms of the sublease. But local real estate sources estimate its value at $4.3 million, with an additional $800,000 going toward tenant improvements.
Early last year, international design firm HOK Inc. completed work on the four-floor, 52,000-square-foot space for IBM, which built the space for its Internet business advisory group. The offices won the International Interior Design Association’s “Best of Competition” nod in 2001.
But the e-Business unit, a subsidiary of IBM’s Global Services division, spent less than nine months in the space before shutting down the operation for what IBM spokeswoman Gretchen McWhorter termed “cost savings” purposes last fall.
“It’s a beautiful space,” said Dave Toomey, partner at CRESA Partners. “But anybody looking at that space is going to have to do quite a bit of work to make it functional.”
Staff reporter Danny King can be reached at (323) 549-5225 ext. 230, or at