The alternative weekly newspaper, LA Weekly, is upgrading its office with a move from Hollywood to the Westside.
The newspaper has signed a deal to fully occupy the three-story, 24,000-square-foot building at 3861 Sepulveda Blvd., next to the San Diego (405) Freeway.
The 10-year deal, valued at $7.5 million, closed July 31. The newspaper, which has a staff of 110, will move into the new offices in May 2008.
The lease with landlord Sepulveda Group LLC, a group of private investors, breaks down to about $2.60 per square foot per month.
Beth Sestanovich, publisher of LA Weekly, said that the new offices, which will feature prominent LA Weekly signage, are a significant upgrade from the newspaper’s current digs at 6715 Sunset Blvd.
“It is dated and old and it is a very difficult layout and as a result there is a lot of unusable space,” said Sestanovich. The newspaper has been at the Hollywood offices for about 15 years.
The new building is located in Culver City, just south of Venice Boulevard. The property backs up to the freeway, affording the newspaper signage that faces the freeway.
“It is a highly identifiable building on the 405 and it is an excellent opportunity,” said Blake Mirkin of CB Richard Ellis Group Inc., who represented the landlord. Mirkin said the building was on the market “for some time” because of its challenging location on the edge of two office submarkets.
The free newspaper, which is the country’s largest alternative weekly, is owned by Village Voice Media. Sestanovich said the move from hip and grittier Hollywood would not impact the weekly’s news coverage.
“When I think of LA Weekly I think of the greater L.A. area. Not only do we distribute throughout it, but we cover all of L.A.,” Sestanovich said.
Gary Horwitz and Michael Siteman of Staubach represented the newspaper along with negotiation assistance from real estate attorneys Alan Bergman and Tom Sestanovich of Moldo Davidson Fraioli Seror & Sestanovich LLP. Tom Sestanovich is the LA Weekly publisher’s husband.
Hollywood Deal
The LeFrak Organization Inc., the company of the prominent LeFrak real estate family of New York, has purchased a 12-story office tower in the heart of Hollywood for $50 million.
The seller in the off-market deal was commercial real estate investment group Broadstone Hollywood LLC. The transaction for the 175,000-square-foot tower at 7060 Hollywood Blvd. closed August 28.
Broadstone had owned the building at the three-quarter acre site for two years and had planned to convert the vacant office building into a condominium tower.
However, with Hollywood experiencing a significantly tighter office market, the LeFraks thought the building made sense as an office project, said Bob Safai of Madison Partners.
“The office vacancy rate in Hollywood is the lowest it has been in the last 20 years,” said Safai, who represented the seller. “The LeFraks look at it and say, ‘Why would we do condo when the office market is so frothy?'”
The Hollywood/West Hollywood office market had a 5.4 percent vacancy rate in the second quarter, down from 7.6 percent a year earlier, according to Grubb & Ellis Co.
The LeFraks plan an extensive renovation of the building to the tune of about $10 million and architects have already begun to review the site, Safai said.
The LeFraks represented themselves in-house on the deal. Steve Salas, Joe King and Rick Buckley of Madison Partners will lease out the building on behalf of the LeFrak Organization.
Koreatown Sale
Santa Rosa Developers Ltd., a Corona-based commercial developer, has purchased a 117-unit Koreatown apartment building from Bascom Grand Lafayette Apartments LLC.
The $18 million sale, which closed Aug. 15, breaks down to about $153,846 per rental unit. The 1972 three-story building at 274 S. Lafayette Park Place is on the eastern side of Koreatown.
“Koreatown is moving from west to east because of growth and expansion,” said David Casper of brokerage Hendricks & Partners Inc. “It can’t move further west because it is bumping up against Hancock Park.”
Casper, who represented both sides of the deal, said that the buyer plans to spend about $15,000 per unit on a renovation that will take up to 24 months. “It will take all the units to a lifestyle level,” he said.
Currently the average rental rate at the property, which has 15 vacant units, is $948 per month. Studios rent for as low as $647 per month and the most expensive two-bedroom units lease for $1,173. When the renovation is complete, the new landlord plans to raise occupancy rates and seek about $1,000 for studios and nearly $2,000 for two-bedroom units.
The seller is an entity of the Bascom Group LLC, an Irvine-based apartment investor. Karoline Sauls of Hendricks & Partners also represented both sides of the deal.
Staff reporter Daniel Miller can be reached at
[email protected]
, or (323) 549-5225, ext. 263.
